Incident Overview

The company released its 2024 mid-year report. In the first half of 2024, the company achieved revenue of 0.307 billion yuan, a year-on-year decrease of 1.24%; realized net profit to mother of 7.65 million yuan, a year-on-year decrease of 83.4%.

24Q2 achieved revenue of 0.156 billion yuan, a year-on-year increase of 1.1%; net profit to mother was 1.34 million yuan, a year-on-year decrease of 94.2%.

Maintaining high R&D investment has an impact on profits

In the first half of 2024, the company's R&D expenses reached 0.088 billion yuan, an increase of more than 35% over the same period last year. In the face of a slight decline on the revenue side, R&D investment had a big impact on the profit side. According to the company's interim report, in the first half of 2024, the company had 240 R&D personnel, an increase of more than 30% over the same period last year, and the average salary of R&D personnel increased. 2024H1's R&D expenses rate reached 28.6%, an increase of nearly 8 pcts over the same period last year. The company's management expenses increased 46% year-on-year in the first half of 2024, mainly due to an increase in employee remuneration due to an increase in management and functional personnel, and depreciation of the subsidiary's plant and usage rights assets that have not yet been officially put into use and included in management expenses. Overall, the company invests heavily in R&D as a technology-based company. We believe that the company's revenue scale is more important. Maintaining a high R&D investment will have an impact on profits to a certain extent.

The accumulation of time-domain products is deep, and DHO series products have achieved high growth

The company has a deep accumulation of oscilloscope products. Currently, the DS80000 series is the most high-end product, with a maximum bandwidth of 13 GHz and a maximum sampling rate of 40 GSa/s. According to the company's interim report, the company's revenue from oscilloscopes equipped with self-developed chips reached 78% in the first half of 2024, an increase of 5 pct over the previous year; 24H1's DHO series high-resolution oscilloscope revenue increased by more than 200% year on year. At the same time, the company's high-end oscilloscope mainframes and optional accessories accounted for 23.9% of the revenue of oscilloscopes. The company's oscilloscopes are leading in terms of type spectrum, technology, channels, etc., and have maintained considerable growth in recent years. On the gross margin side, the company's 24H1 gross margin reached 56.67%, up 1.06 pct from the same period last year; 24Q2 gross margin reached 58.5%, up 1.5 pcts year on year. The company's product iterations continue to drive upward profitability.

Acquired Endurance Electronics to develop power components and remote sensing fields

According to the company's announcement, up to now, the company has acquired 100% of Endurance Electronics's shares in cash+equity to improve the company's capabilities in quantum information and remote sensing detection. According to the company's interim report, 2024H1 Endurance Electronics's revenue increased 750% year-on-year. As of the end of May 2024, the amount of in-hand orders for Endurance Electronics was close to 70 million yuan, and it has the ability to continuously obtain orders. Puyuan Jingdian's time-domain products and technology are strong. After the acquisition of Endurance Electronics, it is expected to break through capabilities in the frequency domain and new fields, bringing more growth.

Investment advice

We expect the company's 24-26 revenue to be 0.78/0.9/1.07 billion yuan, net profit to mother 0.106/0.135/0.173 billion yuan, and EPS 0.55/0.70/0.90 yuan. According to the closing stock price of 26.44 yuan/share on September 6, 2024, the company's 2024-2026 PE was 47.9/37.6/29.4 times. The company is a leader in electronic measuring instruments. Oscilloscope products are leading breakthroughs in domestic equipment, and high-end new products are expected to accelerate iteration, and the sector will benefit from domestic replacement for a long time. The company has a high growth ceiling and is highly irreplaceable. Covered for the first time, giving it an “gain” rating.

Risk warning

Technology research and development fell short of expectations; high-end market development progress fell short of expectations; downstream demand recovery fell short of expectations.