Key points of investment

The company's 2024H1 revenue grew steadily, and net profit to mother achieved rapid growth. The company released the 2024 semi-annual report. The company achieved revenue of 0.276 billion yuan in 2024H1, an increase of 37.75% over the previous year; achieved net profit of 0.074 billion yuan, an increase of 65.11% over the previous year. In 2024Q2, the company achieved revenue of 0.172 billion yuan, a year-on-year increase of 33.60%; net profit to mother was 0.047 billion yuan, an increase of 35.30% year-on-year.

Continued promotion of the company's electrochemical workstations in 2024

By product, 2024H1's structural mechanical performance testing and analysis system/structural safety online monitoring and defense equipment PHM system/electrochemical workstation/PHM-based intelligent equipment maintenance management platform achieved revenue of 1.90/0.04/0.026/0.014 billion yuan, respectively, of +36.24%/+15.78%/+135.51%/+33.56%, respectively. We believe that in 2024, the promotion and implementation of the company's electrochemical workstations was effective, and the sector achieved high growth; at the same time, the pace of downstream customer projects in special industries recovered, and the company's structural mechanical performance testing and analysis system resumed rapid growth.

The company's net interest rate has increased markedly, and profitability continues to increase

2024H1's gross margin/net margin was 66%/26.85%, respectively, -0.03/+4.38pcts year-on-year, respectively. The company's gross margin remained stable, and the net margin increased markedly. We think it is mainly because while the company's revenue has increased significantly, it has better control over sales expenses, management expenses, etc., and refined management enhances the company's profitability.

Torque sensors are expected to bring new room for the company to grow

In 2023, the company further increased its investment in sensor research and development. The company's six-component force sensors, impact pulse sensors, and magnetostrictive sensors have entered the internal development stage. The six-axis force sensor can measure force and moment in three orthogonal directions in real time. Through matrix decoupling to improve accuracy, the company can achieve crosstalk: < 2% FS; nonlinearity: < 0.5% FS; hysteresis: < 0.5% FS. The product can be used in robotics, scientific research, automated inspection, etc.

We believe that with the expansion of the torque sensor business, it is expected to bring new growth points to the company.

Leading structural mechanical performance testing instruments, maintaining the “purchase” rating, the domestic macroeconomic climate recovery was slow in 2024, and the pace of the company's PHM business development slowed down. We believe that in 2024, the company's special industry orders may return to a normal pace, and sensors are expected to bring new volume to the company. We expect the company's revenue for 2024-2026 to be 0.54/0.71/0.9 billion yuan, net profit to mother 0.14/0.19/0.23 billion yuan, respectively, and a CAGR of 27.18%. EPS is 1.04/1.34/1.68 yuan/share respectively. The company is a leading domestic structural mechanical performance testing instrument; force sensors are expected to bring new demand and maintain a “buy” rating.

Risk warning: The macro environment falls short of the expected risk, the promotion of new products falls short of the expected risk, and the PHM penetration rate falls short of the expected risk