Net profit attributable to mother was +16% compared to the same period, reaffirming the “buy” rating
Su Test released an annual report. In 2023, it achieved revenue of 2,117 million yuan (yoy +17.26%), net profit to mother of 314 million yuan (yoy +16.44%), and deducted non-net profit of 280 million yuan (yoy +17.08%). Among them, Q4 achieved revenue of 590 million yuan (yoy +8.24%, qoq +6.29%) and net profit to mother of 93.95552 million yuan (yoy +3.03%, qoq +11.14%). We expect the company's net profit to be 4.01/506/621 million yuan in 2024 to 2026, including 3.17 billion yuan for services/equipment in 2024. According to the segmented valuation method, considering that Sutest's ROE is higher than the average value of comparable service companies, the 2024 service is given 27.4xPE/equipment 25.2xPE (average value of 22.8/25.2x) and a target price of 21.24 yuan (previous value 24.82 yuan), reaffirming the “buy” rating.
Environmental testing services: All major laboratories have increased their revenue, actively expanding their NEV testing capacity. In 2023, the EIA service revenue was 1.03 billion yuan, +19.5% year-on-year, with a gross profit margin of 58.8%, and +1.9pp year-on-year.
All major laboratories achieved revenue growth: Suzhou Guangbo achieved revenue/net profit of 356/105 million yuan, +18/28% year on year; Chengdu Guangbo achieved revenue/net profit of 122/034 million yuan, +21/ -17% year on year; Xi'an Guangbo achieved revenue/net profit of 1.00/ 0.28 billion yuan, +19/ 17% year on year; Beijing Chuangbo achieved revenue/net profit of 1.48/ 038 million yuan, +11/ 76% year on year, through optimization and adjustment reforms. The NEV sector grew at a high rate in '23, and sectors such as communications and aerospace maintained steady growth. According to the company's announcement on March 29, the company will expand three new energy sub-centers in Chongqing, Shenyang and Guangzhou on the basis of the original Suzhou Guangbo Laboratory.
Environmental test equipment: The share of NEV and inspection agency customers increased the 2023 EIA equipment revenue by 753 million yuan, +23.0% year-on-year. The main reason was that NEV and inspection agency customers were active, and the sales share increased markedly; the gross profit margin was 32.8%, -1.0pp, mainly due to changes in the sales product structure, which is a normal fluctuation. The hydraulic vibration test system developed by the company has the characteristics of high thrust and low frequency. It is mainly used for large-scale tests such as earthquakes, bridges, ships, etc. In the future, the company will increase research and development and continue to explore the market.
Suxiyite: Increased equipment and personnel costs have dragged down 23-year performance. Production capacity is expected to release Suxiyite's revenue/net profit of 2.81/044 billion yuan in 2023, -6/ -21% year on year, net interest rate 21.2% year on year, and -3.7pp year on year. The main reason is that the company expanded test sites in Shanghai, Shenzhen and Suzhou, rapidly expanded equipment production capacity and talent reserves, and increased operating costs. Considering the gradual release of new production capacity, we expect both Yite's revenue and net profit to increase significantly in 2024. The Sushiyite Shanghai Minhang Virtual Laboratory (Remote Laboratory) will be officially launched on April 1, 2024. The laboratory will provide customers with remote on-board services. The laboratory initially includes projects such as Thermal EMMI, InGaAs, OBIRCH, SEM, DB-FIB, and Nano Probe to comprehensively improve the level of informatization applications in the chip inspection industry.
Risk warning: Customer R&D funding growth fell short of expectations, laboratory order processing progress fell short of expectations, and increased market competition led to lower profit margins than expected.