Core views:

Net profit not returned to mother after deduction grew rapidly in '23, and operating cash flow was drastically corrected. The company released the 2023 report and the 2024 quarterly report: in '23, the company achieved revenue of 787 million yuan (YoY +16.50%), net profit attributable to mother of 43.81 million yuan (-8.37% YoY), net profit of 24.85 million yuan (YoY +139.31%); 24Q1 achieved operating income of 115 million yuan (-14.77% YoY) and net profit to mother of 336.2 million yuan (change of profit to loss). In '23, the company achieved steady revenue growth through product iteration, technology development, and market expansion, and along with the increase in gross margin, the company deducted significant growth in performance. The large fluctuation in net profit due to the large fluctuation mainly due to the fact that the company received a government subsidy of 11.5 million yuan in '23, which is a decrease compared to 34.85 million yuan in '22. In addition, the company's operating cash flow reached 97.42 million yuan in '23 (-2.07 million yuan in '22, a significant correction).

There is a high increase in leak detectors, and it is expected that analytical instrument reserves will be released. In addition to new energy, the company actively explores incremental markets such as semiconductors and overseas. Industrial process leak detectors achieved revenue of 462 million yuan (+59.75%) in '23, and gross margin of +5.11 pct to 52.70% year over year. In '23, the online monitoring instrument achieved revenue of 248 million yuan (-15.63% YoY), and the corresponding gross margin was 40.96% (-4.35pct year on year).

The analytical instrument business developed 6 liquid phase jets and 9 ion jets in '23, and achieved revenue of 47 million yuan (+26.18%) in '23, and gross margin decreased by 6.54 pct to 44.25% year on year.

R&D investment increased by nearly 24% year on year, and many new products were released one after another. R&D investment in '23 reached 166 million yuan (+23.99%), accounting for 21.15% of revenue; by the end of '23, the company had 594 R&D personnel (+38.46% year over year), accounting for 43.29% of the total number of employees. The company released a triple four-stage liquid-quality combined system in 23, etc., to strengthen its layout in the medical device field, complete initial sample development and verification tests for the dialysis machine project, and complete CE registration for IVDR by fluorescence quantitative PCR.

Profit forecasting and investment advice. The company's net profit for 24-26 is estimated to be 0.70/0.95/131 million yuan, corresponding to the latest PE of 34.09/24.92/18.09x. The reference industry gave 35 x PE for 24 years, and the corresponding reasonable value was 18.15 yuan/share.

Risk warning. Order acquisition falls short of expectations; heavy reliance on government subsidies; competition increases risks, etc.