This report mainly answers the following two questions: 1) Why is the powertrain testing industry of joint testing technology a high-quality track? 2) where is the core competitiveness of joint testing technology compared with its peers?
Joint testing technology: the domestic advanced power system test solution provider has been ploughing the power system testing industry for 20 years, and its main business is power system intelligent test equipment and power system test verification services. The company's performance has grown rapidly, with revenue from 165 million yuan in 2017 to 358 million yuan in 2020, with a CAGR of 29.58%, and net profit from 29 million yuan in 2012 to 73 million yuan in 2020, with a CAGR of 35.88%. In addition, the company has strong profitability, the gross profit margin in 2017 is 39.71%, the net interest rate is much higher than its peers, and the average ROE for four consecutive years (2020-2020) is 18.39%.
The market space of the industry is broad, and the downstream boom is expected to usher in new opportunities in the industry. 1) based on the measurement of the market scale of the downstream segments and the proportion of R & D expenditure in the downstream areas, by 2025, the market space of the industry where the joint testing technology is located is expected to reach about 15 billion of the market size, and the industry market space is broad.
2) the future development trend of the power system testing industry of the company depends on the demand of the downstream application field. 1 the global market for automotive and aviation test equipment is expected to grow at a compound annual growth rate of 4.1%. (2) New energy vehicles are expected to continue to flourish. In 2025, the sales of new energy vehicles in China will reach about 20% of the total new car sales. with the rapid development of new energy vehicles, the demand for power testing will also increase greatly. (3) China's determination to develop domestic aero-engines is clear. China Aviation Development Group was formally established in 2016, and the two-engine special project was officially implemented in 2017, and the aero-engine market has great potential for development.
The company's core competitiveness: strong R & D strength + binding major customers + excellent management capabilities 1) the company has a large investment in R & D. the R & D expenditure rate of the company from 2017 to 2020 is higher than 6%, and the company takes the lead in strategically entering the high-end field-aviation field. it has a certain first-mover advantage and has a higher performance-to-price ratio. 2) the company binds high-quality customers to form a brand moat, and successfully provides equipment and testing services for many well-known customers in the fields of new energy vehicles, fuel vehicles, ships and aviation, and the customers are sticky.
3) the company strives for excellence and excellent management ability, and the expense rate during the period is far lower than that of its peers.
Profit forecast and valuation:
It is estimated that the total operating income of the company from 2021 to 2023 is 503 million yuan, 649 million yuan and 840 million yuan respectively, and the net profit is 103 million yuan, 131 million yuan and 169 million yuan respectively, corresponding to 45.28X, 35.33X and 27.42X respectively. We give the company 64X Pamp E in 2021, and the target price is expected to be 103.04 yuan. Cover for the first time and give a buy rating.
Risk tips: automotive industry fluctuation risk; important raw material supply fluctuation risk; new customer development risk; accounts receivable recovery risk; new technology research and development risk; measurement is subjective, for reference only.