Introduction to this report:

The company's 2024 three-quarter report is in line with expectations. Through comprehensive promotion of fine management, profitability continues to improve.

At the same time, the company announced a share repurchase plan, demonstrating confidence in long-term development.

Key points of investment:

Maintain an increase in holdings rating. The company leads the measurement and testing business in China. Through comprehensive promotion of fine management, profitability continues to improve. Maintain the company's 2024-26 EPS at 0.53/0.69/0.86 yuan, refer to the industry's valuation of 31.04 times in 2025, give the company 30 times PE in 2025, raise the target price to 20.7 yuan, and increase the rating.

The company released its 2024 three-quarter report. In the first three quarters of 2024, the company achieved revenue of 2.16 billion yuan (YoY +10.01%), net profit of 0.189 billion yuan (YoY +42.18%), net profit of 0.165 billion yuan (YoY +46.21%); 2024Q3 achieved revenue of 0.816 billion yuan (+11.45% YoY) and net profit to mother of 1.09 yuan (YoY +50.22%), net profit of 0.099 billion yuan (YoY + 42.63%), and the performance was in line with expectations.

Continue to promote refined management, and profitability has improved markedly. The company continues to expand its market and achieve steady growth in orders in key fields such as special industries, automobiles, integrated circuits, and data science. At the same time, by optimizing the organizational structure and management responsibility assessment system, establishing an assessment model centered on profit, optimizing the personnel structure, improving equipment utilization, strengthening the control of various expenses, and further improving weak business sectors. The company's gross margin for the first three quarters of 2024 was 44.54% (+2.23pct year on year), and the net margin was 8.54% (+2.06pct year on year). The cost reduction and efficiency increase were significant, and profitability is expected to continue to increase.

The company issued a share repurchase plan, demonstrating confidence in long-term development. On October 8, 2024, the company announced a share repurchase plan. The total share repurchase capital is 0.2-0.4 billion yuan. The share repurchase price does not exceed 18 yuan/share. The repurchase implementation period is within 6 months from the date of adoption of the repurchase plan. On October 20, 2024, the company announced that it had received CCB's “Special Loan Commitment Letter for Stock Repurchase”, promising to provide the company with no more than 0.299 billion yuan of loan capital for stock repurchase.

Risk warning: downstream demand falls short of expectations; market competition intensifies.