Next Monday (December 9), a GEM listed company “Brocade Test” will subscribe. The issuance price is 38.46 yuan.

Brocade Testing (301598): The company's main business is comprehensive services such as R&D, design, manufacturing, sales, and system integration of servo hydraulic test equipment and automobile test equipment. The company achieved operating income of 0.405 billion yuan/0.459 billion/ 0.469 billion yuan respectively; YOY was 9.42%/13.14%/2.27%; realized net profit to mother 0.082 billion yuan/0.098 billion yuan/0.096 billion yuan, and YOY was 11.68%/18.73%/-1.49% in that order.

In the latest reporting period, from January to September 2024, the company achieved operating income of 0.322 billion yuan, a year-on-year increase of 14.33%, and net profit to mother of 0.065 billion yuan, an increase of 83.48% over the previous year. According to the company's management's preliminary forecast, the company's revenue in 2024 increased 9.53% year on year, and net profit to mother increased 4.10% year on year.

Investment highlights: 1. Relying on the acquisition of Servotest in the UK and the exclusive agency qualification granted by Bauck in China, the company established a strong technical foundation in the early stages of development and gradually grew into one of the leading companies providing servo-hydraulic test systems and automotive test systems. According to the company's prospectus, the company's servo hydraulic testing business originated with Servotest in the UK; the company has accumulated more than 60 years of technical and business experience in the field of servo hydraulic testing. Considering Servotest's brand influence and product competitiveness in the field of vibration testing, the company's actual controller completed the acquisition of Servotest in the early 21st century, laying a solid technical and product foundation for its servo hydraulic testing business. At the same time, the company is the exclusive agent of Bauke, an international high-end automotive testing and testing equipment supplier, in China since 2006. It can sell high-end products such as Bauke's four-wheel locators, headlight testers, integrated hub braking test benches, chassis dynamometers, etc. to domestic customers directly or in the form of an integrated system; through this model, while enriching sources of revenue, the company has also established strong technical barriers in the field of automotive testing and testing equipment. Benefiting from the initial technical foundation, the company has now developed into one of the core suppliers of servo-hydraulic test systems and automotive test systems. Its key technology is comparable to international brands and has a solid market foundation. According to the prospectus, the company's share in the high-end servo hydraulic testing market is about 15%; at the same time, the market segment corresponding to the automotive R&D and production process adds about 2 billion yuan in business scale every year. Based on this, it is estimated that the company's market share in this segment is about 15%. 2. Based on technical accumulation in the field of traditional automobile testing and testing equipment, the company is actively strengthening the layout of products in new application fields such as new energy vehicles and autonomous driving. 1) In terms of new energy vehicles, since new energy vehicles have added components such as power batteries, motors, and electronic control compared to traditional vehicles, they need to add power battery system tests, motor and controller tests, charging system tests, etc., so the overall unit price of testing equipment is higher than that of traditional automobiles.

The company began research and development of new energy vehicle testing solutions in 2013; in 2014, it launched the first new energy vehicle testing equipment to BYD; up to now, BYD has become the company's largest customer, accounting for more than 26% of sales revenue from BYD in 2023. At the same time, it has also successively received orders from NEV companies such as Xiaopeng Motor, NIO Auto, Hezhong New Energy, BAIC New Energy, Chery New Energy, and Changan New Energy. In terms of revenue growth, revenue from NEV-related businesses increased from 50.7656 million yuan in 2020 to 194.9727 million yuan in 2023, which is the main contribution to the company's revenue growth at this stage. 2) In terms of intelligent driving, the company began testing the autonomous driving business in 2014, began developing a smart cloud platform management system for equipment and production tests based on the SIRIUS platform in 2019, and launched the first set of products to a central commercial vehicle enterprise in 2021. It has now successfully received an order from a joint venture passenger car company.

Comparison of listed companies in the same industry: Based on the similarity of their main business, Joint Testing Technology, Huayi Technology, and Sutest were selected as comparable listed companies of Brocade Testing. Looking at the comparable companies mentioned above, the average revenue of comparable companies in 2023 was 0.988 billion yuan, the average PE-TTM (excluding negative values/arithmetic average) was 25.50X, and the average gross margin of sales was 41.63%. In comparison, the company's revenue scale was not as high as the industry average, but the gross margin was in the middle to high range of the same industry.

Risk warning: There is still a possibility that companies that have begun the inquiry process will not be able to go public due to special reasons; company content is mainly based on the content of prospectus and other public information; there is a risk that the selection of listed companies in the same industry is not accurate enough; there may be interpretation deviations in the selection of content data. The specific risks of listed companies are shown in the text.