The performance in 2020 was consistent with that of KuaiBao, and the 1Q21 performance returned to rapid growth. The company achieved revenue / return net profit of 702 million yuan in 2020 (both in line with the performance of KuaiBao), a year-on-year decline of 13.48%. The decline in revenue was mainly due to the impact of the epidemic, while construction projects were completed one after another, and depreciation expenses increased by 12% compared with the same period last year, further dragging down net profit. Since the epidemic was gradually brought under control, the demand for testing has continued to recover. The company's 1Q21 revenue increased 91% to 183 million yuan compared with the same period last year, and the high operating leverage leveraged home net profit recorded 22 million yuan (1Q20:-0.43 billion yuan). According to the company's annual report, the Inner Mongolia case has been withdrawn, and the company's business environment continues to improve. We estimate that the 21-23 net profit of returning to the mother will be RMB 2.51 million, with a target price of RMB 10.89 for the target PE, of 33x for 21 years, maintaining the "buy".
In 2020, the revenue of high-voltage / low-voltage electrical equipment testing fell by 13% compared with the same period last year. 18% of the business: 1) low-voltage electrical appliance testing: revenue 109 million yuan (year-on-year-18%), revenue accounted for 15.5% (year-on-year-1.0pct), low-voltage testing downstream demand is relatively stable, incremental space comes from transmission and distribution network construction and product upgrading. 2) High voltage electrical equipment testing: revenue is 540 million yuan (- 13% compared with the same period last year), of which the project revenue of high voltage and nuclear power appliance seismic performance test system / 12kV DC test system increased by 31gamma 122% respectively compared with the same period last year, while the income of other projects decreased. Benefiting from the UHV restart and the rising demand for new energy (Fengguang nuclear power) / military / automotive electronics and electrical testing, and the company is currently actively expanding the market, high-voltage testing is expected to recover and continue to grow from 2021.
1Q21's revenue / home net profit has increased by 18,39% compared with 1Q19, and the business environment continues to improve. The electrical testing industry is a typical asset-heavy industry. The company's high investment in the past few years has made it number one in the world in this field. The main costs are depreciation and labor costs (the two account for 70% of the cost in 2020). The company's 1Q21 revenue was 183 million yuan, an increase of 91% over the same period last year and 18% over 1Q19. High operating leverage led to a 39% increase in net profit compared with 1Q19. In addition, the company's annual report revealed that the company had recently received a letter of decision on the cancellation of the case by the Saihan District Branch of the Hohhot Public Security Bureau, indicating that the fake case fabricated by the suspected criminal gang had been withdrawn. We believe that the operating environment of the company continues to improve, the market development efforts are expected to be strengthened during the 14th five-year Plan period, and most of the construction projects will be completed in 2021, the depreciation expense is expected to reach the highest in 2022, and the company will transform from high investment to high profit growth.
Maintain a "buy" rating with a target price of 10.89 yuan
The company's 1Q21 revenue is higher than the same period last year, and we believe that the adverse impact of the epidemic has been basically eliminated. considering that the company's 2020 income is lower than our forecast (810 million yuan), we adjust the income growth rate in 21-22. It is estimated that the 21-23 year net return profit will be 2.51 EPS 0.20 million yuan (before 21-22: 2.56 / 337 million yuan), corresponding to 0.33 pound 0.43 pound 0.55 yuan respectively. With reference to the comparable company's 21-year Wind consensus expectation of the median PE 33x, it gives the company the 21-year 33x target PE, target price of 10.89 yuan (previous value: 11.80 yuan) to maintain the "buy".
Risk hint: the progress of project construction is lower than expected, and the progress of market development is lower than expected.