A leader in the intelligent equipment industry in the nuclear industry, technology investment continues to increase. The company focused on the field of special robots and intelligent equipment. In 2023, the company achieved revenue and net profit of 0.255 and 0.035 billion yuan, and the nuclear industry's intelligent equipment and series robots accounted for more than 90% of the revenue. The impact of the decline in early major customer project planning and project delivery and acceptance gradually decreased. According to the semi-annual report issued by the company, 2024Q2's performance began to reverse, achieving revenue +75.68% year-on-year and net profit to mother +405.84% year-on-year in a single quarter. The company attaches importance to R&D: ① it established an employee shareholding platform in 2017 to bind core sales and technical backbone; ② R&D personnel accounted for 40% in 2023; ③ raised additional capital in 2021 (IPO) and 2023 to strengthen the construction of the company's industrial base and R&D center, and continuously increase technology investment.

The company is technologically advanced in nuclear industry products, benefiting from the nuclear fuel cycle industry building China as a country containing depleted uranium. Since 1983, it has determined a “closed cycle” route for nuclear fuel, and spent fuel post-processing is a key link. Demand for off-heap storage is imminent, and fourth-generation fast reactors are about to be put into operation, and the urgency of spent fuel treatment continues to increase. China's spent fuel processing capacity is seriously inadequate. In 2022, China added 805 THM of spent fuel, but the spent fuel reprocessing capacity was only 50 THm/year, and the first 200 tons/year spent fuel reprocessing plant is under construction. Meanwhile, under the policy of “active, safe and orderly development of nuclear power”, demand for reprocessing is growing rapidly. We estimate that China may need to remove 2,825 THm spent fuel in 2035. The company focuses on nuclear industrial robots and intelligent equipment. It is technologically advanced, and has achieved cross-shareholding with its core customer CNNC Group, stabilizing the company's shareholding structure and is expected to benefit from the construction of China's nuclear fuel cycle industry.

The business layout is progressing in an orderly manner, and “nuclear+military+civilian” echelon development

The company promotes “nuclear+military+civilian” echelon development around the “135” development strategy plan. In the military industry, the company formed three product layouts: AGVs, equipment for specific scenarios, and integrated system solutions to form business growth; in the field of nuclear technology applications, the company thoroughly lays out a supply chain system for intelligent equipment, nuclides and nuclear drugs for the application of nuclear technology based on intelligent manufacturing and equipment technology to create a third growth curve.

The company has made a breakthrough in the non-nuclear business. In 2023, the company's non-nuclear business revenue was 17.809 million yuan, accounting for 6.97% of revenue.

Profit Forecasts and Investment Ratings

A leader in intelligent equipment in the nuclear industry, “nuclear+military+civilian” echelon development. Considering that 2024Q2 performance has been drastically reversed, we expect the company's net profit to be 0.118, 0.154, and 0.202 billion yuan respectively, +241.4%, +30.3%, and +30.8%, respectively, corresponding to PE 28, 21, and 16 times. We comprehensively considered comparable company valuations and the scarcity of the company's texture, and gave it 30 times PE in 2025, corresponding to a target price of 45.30 yuan/share, covering the first time and giving it a “buy” investment rating.

Risk warning: The risk of business concentration and vulnerability to changes in industrial policy, risk of performance fluctuations due to discontinuous order acquisition, seasonal risk of performance, risk of high customer concentration, risk of a high share of related sales, and the estimation is subjective (for reference only).