Incident: The company released its 2023 annual report, achieving revenue of 2,889 billion yuan in 23, up 10.94% year on year; realized net profit of 199 million yuan, up 8.39% year on year; realized net profit without return to mother of 174 million yuan, an increase of 78.93% year on year. Looking at a single quarter, 23Q4 achieved revenue of 926 million yuan, a year-on-year decrease of 1.94% and a year-on-month increase of 26.43%; realized net profit to mother of 67 million yuan, a year-on-year decrease of 38.8% and 8.25% month-on-month.
The main business is growing steadily, and the impairment of the goodwill of subsidiaries has dragged down profits to a certain extent. In '23, the company achieved revenue of 2,889 billion yuan, an increase of 10.94% over the previous year, and realized net profit of 199 million yuan to mother, an increase of 8.39% over the previous year. By business, per capita efficiency in the measurement service sector increased significantly, with major customer development continuing to break through, with revenue up 18.79% to 718 million yuan, and gross margin up 4.17 pcts to 48.11% year on year; in the testing services sector, the leading position in the reliability and environmental testing/integrated circuit testing and analysis/electromagnetic compatibility testing business continued to strengthen, achieving revenue of 6.63/2.02/329 million yuan, respectively, +8.17%/34.21%/11.31%; the EHS evaluation service business both fell under pressure. Due to subsidiary Zhongan Guangyuan's performance falling short of expectations, goodwill impairment of 56.6717 million yuan and asset impairment losses of 52.5936 million yuan were calculated during the reporting period.
The overall cost rate remained stable. Sales/management/R&D/finance expense rates for 23 years were 14.23%/7.34%/10.13%/0.59%, respectively, with year-on-year changes of -0.04pct/+0.49pct/+0.02pct/-0.12pct.
The main business has achieved multi-faceted breakthroughs, equity incentives have boosted operating vitality, and profitability is expected to continue to improve.
By sector, the reliability sector undertook multiple testing tasks for high-end equipment for the first time as the lead unit; the electromagnetic compatibility sector company broke through the new market for whole ship inspection; the integrated circuit sector achieved full coverage of high-end chip testing capabilities; the chemical analysis business was recognized by all car manufacturers in Southwest China and South China; and the ecological environment testing sector benefited from the third national soil survey, which is expected to contribute to the company's revenue growth. In 2023, the company released a draft equity incentive plan, which is expected to continue to enhance the enthusiasm of the company's core management team and core cadres, strengthen efficient management, and promote the optimization of the organizational structure and management model.
Investment advice: We expect the company to achieve net profit of 3.8/4.18/521 million yuan in 24-26, respectively, corresponding PE 23/21/17 times. The company is a leading domestic measurement and testing enterprise, consolidating superior business and pioneering new fields of application. It covered for the first time, and was rated “recommended”.
Risk warning: risk of impairment of the company's goodwill, risk of downstream demand falling short of expectations, risk of the company's brand being affected by adverse events