Power system testing equipment leader, expand the smooth development of aviation testing business. The company is the leader of power system testing equipment in China, focusing on fuel vehicle powertrain and complete vehicle at the initial stage of its establishment, and then gradually expanding its business to new energy powertrain and vehicle testing and aero-engine testing and other fields. According to the classification of downstream applications, 2020 new energy vehicles, fuel vehicles, ships, aviation, construction machinery and others account for 45.27%, 32.05%, 10.80%, 5.18% and 6.69% of revenue, respectively.
According to the division of business, the company's test equipment accounted for about 81.18% of revenue in 2020, and test services accounted for about 14.18% of revenue. In recent years, the company's performance has shown a steady growth trend, with a compound annual growth rate of 29.58% in revenue and 35.87% in net profit from 2017 to 2020. In the future, with the rapid growth of downstream testing demand for new energy vehicles and the import substitution of aviation test equipment, the company's performance is expected to continue to maintain rapid growth.
Taking advantage of the wind of new energy, the demand for testing equipment of new energy vehicles is exuberant. According to our estimates, the current market scale of test equipment in the domestic automobile industry is between 5.6 billion yuan and 7.7 billion yuan. According to our grassroots research, at present, the market scale of new energy vehicle test equipment is only 600 million yuan to 700 million yuan, but the new forces of car construction and traditional car companies are increasing the research and development of new energy vehicles, at the same time, with the growth of new energy vehicle sales and the tightening of new energy vehicle mass production policy, the demand for new energy vehicle test equipment is expected to increase. According to our estimation, the market scale of new energy vehicle test equipment in China will be between 1.38 billion yuan and 22.3yuan by 2025. At present, the global passenger car (fuel) test equipment is monopolized by companies such as AVL and Horie, Japan. AVL (2020) and Horie (2019) have revenues of 1.7 billion euros and $740 million, respectively. Because the industrial chain of new energy vehicles is mainly in China, it gives more opportunities to domestic test equipment enterprises, such as Joint Test Technology, Hunan Xiangyi, Wuxi Langdi, Huayi Science and Technology, Qingyan Lingchuang and other enterprises. joint Test Technology is ahead of other domestic competitors in terms of income scale, profitability and product performance. At present, new energy vehicle customers include domestic and foreign leaders such as SAIC, GAC GROUP, Huawei, Ulai Motor, Japan Electric Power and so on. From 2017 to 2020, the company's new energy vehicle business revenue increased from 30.49 million yuan to 162.11 million yuan, with an annual compound growth rate of 51.84%. It is expected to continue to maintain rapid growth in the future.
Aviation testing equipment continues to import alternative space, orders start to grow at a high speed. The global market for aviation test equipment is about $5.38 billion in 2018 and is expected to maintain a compound growth rate of 4.1 per cent from 2019 to 2027. According to our estimation, the market scale of aviation hydraulic dynamometer in China's military field is about 10.2-1.42 billion yuan, and the annual maintenance market scale of hydraulic dynamometer is about 916 million yuan. During the 14th five-year Plan period, with the further increase in the number of military aircraft, the market scale of hydraulic dynamometer in China is expected to maintain a steady growth. From the perspective of competition pattern, China's hydraulic dynamometer suppliers are mainly American KAHN Company, British Froude Hofmann and Joint testing Technology. Due to the escalation of international trade friction, foreign manufacturers are affected in the delivery and maintenance of hydraulic dynamometer, and Joint testing Technology continues to import. At present, the performance of some of the company's hydraulic dynamometer models has been close to the international leading level, and has won orders from customers such as the state-owned Chuanxi Machinery Factory, AVIC Sichuan Gas Turbine Research Institute and AVIC Southern Industry. According to the information statistics of China Aviation Development bidding Network, as of July 2021, the winning bid amount of the company's hydraulic dynamometer has reached 54.2557 million yuan, the order shows a trend of rapid growth, and continues to open import substitution.
Profit forecast and investment rating: we expect the company's net profit from 2021 to 2023 to be 104 million yuan, 148 million yuan and 199 million yuan respectively, with a corresponding EPS of 1.64 yuan per share, 2.31 yuan per share and 3.12 yuan per share, respectively. The corresponding share price PE is 42 times, 30 times and 22 times respectively. Cover for the first time, giving the company a "buy" rating.
Stock price catalyst: large orders for hydraulic dynamometers; new customers for new energy vehicles
Risk factors: the demand for new energy test equipment is not as expected, the import substitution of hydraulic dynamometer is not as expected, and the competition in the industry is intensified.