Introduction to this report:

The company optimized cost control, and net profit to mother increased 194% year-on-year in the 24Q3 single quarter. The products under development have been delivered in small quantities, and we look forward to the implementation of subsequent products to improve the high-end analytical instrument product line.

Key points of investment:

Maintain an “Overweight” rating. We maintain the company's 2024-2026 net profit forecasts of 0.038, 0.057, and 0.08 billion yuan, respectively, and corresponding EPS of 0.56, 0.85, and 1.19 yuan, respectively.

Instrument manufacturers Dingyang Technology and Wanyi Technology were selected as comparable companies, which can compare the company's average PS value 4.68 times in 2025. Since the comparable company has the same application scenarios for the company's analytical instrument products, the company was given 4.68 times PS in 2025, and the target price was raised to 39.29 yuan (previously 28.09 yuan), maintaining the “gain” rating.

2024Q3's net profit for the single quarter increased 194% year over year, and the results were in line with expectations. In the first three quarters of 2024, the company achieved revenue of 0.311 billion yuan, a year-on-year increase of 3.72%; net profit to mother was 35.0965 million yuan, an increase of 32% over the previous year. 2024Q3 achieved revenue of 97.0058 million yuan in a single quarter, down 6.45% year on year; net profit to mother of 11.2556 million yuan, up 194% year on year. The reasons for the year-on-year increase in net profit due to the year-on-year increase in the company's cost control and gradual adjustment of personnel structure, sales expenses and R&D expenses have all declined, and ② other benefits confirmed by collaborative research projects between the company and the government have increased. ①

2024Q3's gross margin increased year-on-year in a single quarter, improving cost control. 1) The gross profit margin for the first three quarters of 2024 was 44.87%, up 0.30% year on year; 2024Q3's gross profit margin for the single quarter was 45.25%, up 2.56% year on year. 2) Since the second half of 2024, the company has strengthened cost control and personnel structure adjustments, and R&D personnel have been adjusted to high-level personnel to control sales expenses and management expenses.

In the first three quarters of 2024, the sales expense ratio, and the R&D expense ratio decreased by 1.61%, 0.55%, and 0.08%, respectively. The 2024Q3 sales expense ratio and management expense ratio for a single quarter decreased by 1.29% and 0.15%, respectively.

The number of products under development is imminent, and the company continues to increase its dividend payment rate and pay mid-year dividends for the first time.

1) In terms of product development: ① The inductively coupled plasma quadrupole-time-of-flight tandem mass spectrometer has completed small-batch trial production of the instrument, and the instrument's performance indicators have been verified; ② the inductively coupled plasma triple quadrupole mass spectrometer has passed actual application verification by semiconductor industry customers; ③ the gas chromatography-single quadrupole mass spectrometer has completed the principle prototype of a single quadrupole mass spectrometer. 2) In the context of the imminent release of research products and the company's optimization of cost control, the company continues to increase dividends. In 2023, the company paid 53.2628 million yuan, with a dividend payment rate of 193%; in 2024, the company paid mid-year dividends for the first time, with a total cash dividend of 7.9875 million yuan.

Risk warning: the risk of technological iteration, the risk of fluctuating raw material prices.