Incident: Su Test released its 2023 report, and the performance maintained steady growth: 1) The company achieved operating income of 2.17 billion yuan (+17.26%) and net profit of 314 million yuan (+16.44%) in 2023. 2) Looking at a single quarter, the company achieved revenue of 590 million yuan (+8.2%) in 23Q4, an increase of 6.3% over the previous month; net profit to mother of 93.96 million (+3%), an increase of 11.1% over the previous quarter. 3) 2023 gross profit margin 45.6% (-1.06pct), net profit margin to mother 14.8% (-0.11pct).
Comment:
Under the wave of new quality and new domain development, with the release of new production capacity, the company is expected to fully accelerate again in 2024.
We believe that in 2023, despite some fluctuations in the downstream economy, the company's performance will continue to grow steadily, outperforming its peers, demonstrating the development resilience of the platform-based layout. It is expected to return to high growth in 2024, and reaffirm the “buy” rating. 1) Environmental testing equipment and services are the ballast stone of the company's performance: We expect the military industry to reverse its predicament and recover in 2024, while demand for environmental testing in the new energy industry is on the rise and is expected to continue to advance rapidly. At the same time, new laboratories and new businesses (EMC, etc.) are expected to contribute new volume.
2) The introduction of new semiconductor testing capacity may return to high growth: As new equipment is put in place one after another, Shanghai Yite is expected to release production capacity one after another, and flexible performance can be expected in 2024. 3) New fields nurture new opportunities: The company continues to explore new fields such as satellite internet, low-altitude economy, communications, medical devices, etc., the market space continues to open up, and its leading advantages continue to be consolidated. 4) Profit forecast: We expect the company's net profit to be 3.86/495/61 billion in 2024-2026, corresponding PE is 19/15/12 times, maintaining a “buy” rating.
Environmental testing services: The leading position is stable, and it continues to expand into new fields. It is expected to benefit from the strong demand brought about by the boom in new energy, low-altitude economy, low-orbit satellites, robotics, energy storage, aerospace, and wireless communications industries.
1) Environmental testing services maintained steady growth in 2023: revenue of 1.03 billion yuan (+19.45%), accounting for 47.4% of revenue, and a gross profit margin of 58.8% (+1.9pct). 2) New energy and 5G communication testing is expected to become a new engine for performance growth: 79% of the NEV product testing center expansion project has been completed, and the infrastructure construction of the fifth-generation mobile communication performance testing technology service platform project has been completed. 3) The company's three-electric testing for new energy vehicles is compatible with basic technology in the field of Evtol, and is expected to benefit from the rapid development of the low-altitude economy in the future.
Good management: Continuously improve the laboratory network layout, and the core laboratory has entered the harvest period. Various laboratories are developing well in 2023:1) Suzhou: 2023 revenue of 356 million (+17.4%) and net profit of 9.51 million (+13%), still in the lead; 2) Xi'an: 2023 revenue exceeded 100 million yuan (+19%) for the first time; net profit of 28.44 million yuan (+17.2%), and production capacity continued to expand. 3) Chengdu: Revenue of 122 million (+21%), net profit of 28.47 million (-30%), net profit margin of 23.3% (-17pct), mainly due to the relocation of a new site, the addition of a Mianyang laboratory, and increased equipment investment. As production capacity climbs, profit margins are expected to continue to improve in the future. 3) Beijing: 2023 revenue of 148 million (+10.6%), net profit of 38.35 million (+76%), net profit margin 25.9% (+9.6pct), significant increase in profitability. 4) The national network layout is complete, and the first “overseas trip”: expand new energy sub-centers such as Chongqing, Guangzhou, and Shenyang, and prepare to build a laboratory in Thailand.
Equipment sales: leading test equipment, equipment advantages establish the company's competitive advantage: 1) In 2023, the company's equipment sales performance grew rapidly: revenue of 753 million yuan (+23%), accounting for 35.6% (+1.7pct), gross profit margin 32.8% (-1pct), and the share of new energy and third-party testing sales increased significantly. 2) Continuously strengthen technical reserves in large-scale and complex comprehensive test systems and hydraulic test systems: It has completed the development of new products such as two 60-ton electric vibration test systems, and is fully equipped with digital communication and centralized control capabilities, which can meet the relevant testing technical requirements for large-scale machines and components in the wind power, nuclear energy, energy storage, automobile and other industries.
Semiconductor testing: The introduction of new production capacity in 2024 may bring high elasticity. 1) In 2023, the integrated circuit verification and analysis business revenue was 257 million (+2.3%), accounting for 12.1%, and the gross profit margin was 43.3% (-13.8pct), mainly due to the rapid expansion of Shanghai Yite Equipment's production capacity and talent reserves, and increased operating costs. 2) New equipment is in place, and new production capacity may lead to a recovery in profits: Shanghai Yite is expanding test sites in Shanghai, Shenzhen and Suzhou. Relevant equipment may be basically put in place and installation and commissioning will be completed in 2024Q2. We expect that with the release of production capacity, Yite's profitability is expected to continue to increase.
Risk warning: The release of laboratory production capacity falls short of expectations, and the development of new fields falls short of expectations