A leader in the smart sensor industry, built a solid financial foundation, and high R&D investment to seek a long way. The company ranked first in the domestic load cell market for 14 consecutive years. As a leader in the smart sensor industry, the company has more than 20 subsidiaries, and its business covers the entire industry chain including production, trade, information services, and equipment manufacturing. The company has a sound financial foundation. Operating income continued to grow in 2018-2022, and has a high gross margin level. Over the years, strong liquidity assets have exceeded 1 billion yuan and healthy cash flow, which can provide a strong financial guarantee for the company to build a “second growth curve”. Furthermore, the company maintained high R&D investment to build technical barriers, and R&D expenses grew by 42.40% year on year in 2022.

The technical barriers of six-dimensional force sensors are high, and humanoid robots open up a new downstream imagination space. The six-dimensional force sensor can sense the six-dimensional force and torque rather than one-dimensional data. It can measure all the forces of an object in three-dimensional space, which is the key for the robot to achieve smooth and intelligent control. Six-dimensional force sensors have high technical barriers, and are difficult in the R&D stage and product selection, so there are few small enterprises in this market. With the advent of a new trend in humanoid robot concepts in 2023, six-dimensional torque sensors have new application scenarios. Based on the expansion of downstream application scenarios and the increasing number of market entrants, the six-dimensional force sensor market is expected to exceed 1.5 billion yuan in 2027.

Forge ahead and build a multi-physical sensor “hexagon warrior”, and epitaxial endogenous maps far into the field of robot sensors. Multiphysical fusion is a development trend on the sensor application side. In 2023, the company accelerated the pace of investment and laid out physical sensors such as grating sensors, power sensors, vision sensors, and laser sensors, and accelerated its transformation into a sensor enterprise integrating multiple physical quantities. In addition, the company has also invested in downstream manufacturers such as automated production lines for Chinese food, production lines for new energy materials, and mine geophysical instruments to build a platform-based industrial Internet of Things group. In the field of humanoid robots, the company epitaxial promotes robot sensor seed project reserves and endogenously conducts multi-dimensional force sensor development and trial production. As of July 2023, the company's development of multi-dimensional force sensors is in the small-batch trial production stage.

Profit forecast and investment advice: In 2023, the company invigorates its foreign investment layout, and it is expected that it will gradually enter the harvest period. The company's net profit for 2023-2025 is estimated to be 3.07/386/487 million yuan, corresponding to PE of 32.25, 25.65, and 20.35 times. Referring to comparable company valuations, the first coverage was given a “buy” rating.

Risk warning: Macro fundamental risks, development progress of multi-dimensional force sensors falling short of expectations, foreign investment falling short of expectations.