Description of the event
Radio and Television Measurement released its 2024 mid-year report. Net profit for the first half of the year was 1.344 billion yuan, up 9.2% year on year; net profit to mother was 0.08 billion yuan, up 32.5% year on year; net profit after deducting non-return to mother was 0.066 billion yuan, up 51.9% year on year; of these, Q2 revenue was 0.756 billion yuan, up 10.2% year on year; net profit due to mother was 0.078 billion yuan, up 25.0% year on year; net profit without return to mother was 0.072 billion yuan, up year on year 35.3%
Incident comments
In the first half of the year, several sub-directions showed good growth momentum. By sector, 1) Measurement services: revenue 0.344 billion yuan, +3.35%, gross profit margin 46.1%, year-on-year, -1.46pct, Guangzhou headquarters relocation affected the growth rate in stages, and new cultivation directions such as aviation and photovoltaics grew faster; 2) Reliability and environmental testing: revenue 0.318 billion yuan, up 5.38% year on year, gross profit margin 44.5% year on year, -1.22 pct year on year. Special industries achieved restorative growth, breakthroughs in order development, and the NEV business developed rapidly; 3) Integrated circuits: revenue: 0.111 billion yuan, up 39.8% year on year, gross profit margin +2.66 pct, Beidou satellite navigation product supply chain security special service continued to break through; 4) electromagnetic compatibility: revenue 0.148 billion yuan, up 7.95% year on year, gross profit margin 45.8% year on year, up 2.21 pct year on year, aircraft airborne business contracts increased, and new national medical device registration certification obtained; 5) Life sciences: revenue 0.23 billion yuan, up 7.79% year on year, gross profit margin 39.5% year on year + 9.55pct, new environmental and food projects are expanding smoothly, laboratory losses are being reduced; 6) EHS evaluation service: revenue 0.047 billion yuan, down 2.42% year on year, gross profit margin 0.49%, -16.92 pct year on year, Zhongan Guangyuan lost 25.17 million yuan (loss reduced by 2.08 million yuan).
High-quality development results are obvious, and profitability is gradually improving. Since taking office at the end of 2023, the company's new leadership team has promoted refined management in many areas. The gross margin increased by 0.29 pct in the first half of 2024, and the food and environmental laboratory achieved initial results in reducing losses, driving the gross margin of the life sciences sector to increase by 9.55 pct; the cost ratio decreased by 1.28 pct during the period under fine management; and the net interest rate increased by 1.19 pct. 2024Q1 turned net profit into profit; 2024Q2 net interest rate increased 1.23pct year-on-year to 10.3%, and high-quality development was gradually realized. Net operating cash flow increased 28% year-on-year to 0.16 billion yuan in the first half of the year. The revenue ratio remained high at 95%, and the cash flow situation was good.
A national high-end manufacturing and testing enterprise, 2024 ushered in multiple highlights. 1) Good qualifications provide momentum for subsequent growth: the company is a national, comprehensive high-end manufacturing and inspection enterprise, with a total original value of 2.464 billion yuan of testing equipment at the end of 2023 (up 10.47% year on year), with abundant production capacity; 2) Demand improvement expectations for superior sectors: reliability and environmental testing/electromagnetic compatibility will slow to 8.2%/11.3% due to special events in the military industry in 2023. In addition, the 2024 military inspection order is expected to bottom out and repair. In addition, benefiting from the development potential of new automobile models, the company's automobile inspection business has grown The company's order situation has responded in the first half of the year; 3) Net interest rate increases are expected: ① Weak sector loss reduction: In 2024, the company adopted a contraction strategy for food and environmental loss laboratories, and deeply integrated management of food, environmental and chemical analysis laboratories, and adjusted the management team of Zhongan Guangyuan (EIA business); ② Personnel control: the number of employees in the company was 6304 by the end of 2023, a decrease of 11; ③ capital expenditure slowdown: The company plans to invest 0.298 billion yuan in technical reform capital in 2024, a decrease of 21.9% year on year.
The equity incentive plan was implemented, based on profit and cash flow. The company announced that it will grant 8.625 million stock options and 8.625 million restricted shares to the incentive target using July 1, 2024 as the award date for the incentive plan.
Profit forecast and valuation: Expected 2024-2026, the company's revenue is 3.299 billion yuan/3.76 billion yuan/4.29 billion yuan, up 14.2%/14.0%/14.1% year on year; realized net profit to mother 0.314 billion yuan/0.403 billion yuan/0.518 billion yuan, up 57.3%/28.6% year on year, corresponding to PE valuation of 21.8x/17.0x/13.2x; maintain” “Buy” rating.
Risk warning
1. Ecological environment and food testing losses fall short of the expected risk; 2. The net interest rate falls short of the expected risk due to insufficient capacity utilization.