Core ideas:

Deeply cultivate the three major sectors of display, semiconductors, and new energy sources. The company is a high-tech enterprise dedicated to providing inspection/testing equipment for semiconductors, displays, and new energy testing; since its establishment, the company has been deeply involved in flat panel display testing, relying on the vertical integration capabilities of “light, mechanical, electricity, computing, and software” to break overseas technology monopolies and is at the leading level in the field of panel display inspection; since then, the company has actively laid out new tracks and established subsidiaries such as Wuhan Jinghong and Wuhan Jingneng to enter the fields of semiconductors, new energy, and laser equipment.

Semiconductor quantity testing equipment continues to break through. According to the 2016 semi-annual report, the company is one of the leading companies in the field of semiconductor testing equipment in China. The core products have covered advanced manufacturing processes. Film thickness products, OCD equipment and electron beam defect review equipment have obtained repetitive orders for advanced processes, and the semiconductor sector has ordered about 1.767 billion yuan. According to the announcement issued by the company on December 20, '24, the holding subsidiary “Shanghai Precision Testing” has signed multiple sales contracts with customers to sell bright field defect inspection machines and stress testers, etc., with a total transaction amount of about 0.12 billion yuan .

The display sector is expected to benefit from AMOLED 8.6 generation line construction and the consumer electronics innovation cycle.

According to BOE and Vicino's “Investment and Construction of the 8.6th Generation AMOLED Production Line Project”, BOE and Vicino built 8.6th generation AMOLED production line projects in Chengdu, Sichuan and Hefei, Anhui, respectively. The company has benefited significantly; as AI functions continue to mature, it is expected to drive innovation in products such as mobile phones, XR, and AI glasses.

Profit forecasting and investment advice. We expect that the 2024-2026 revenue of Precision Measurement Electronics will be 2.925/3.648/4.38 billion yuan, and the net profit for the same period will be 0.213/0.382/0.577 billion yuan, EPS 0.78/1.39/2.10 yuan/share. Combined with the valuation level of comparable companies, considering the company's important position in the semiconductor measurement field and the company's expansion potential in the fields of displays, semiconductors, new energy, etc., we will give 50 times the PE valuation in 25 years, corresponding to reasonable value 69.64 yuan/share, giving a “buy” rating.

Risk warning. Risk of macro-environmental uncertainty, risk of customer concentration, risk of semiconductor equipment technology research and development, risk of fund-raising projects not achieving expected benefits.