Event description:

In the first three quarters of 2021, the company achieved an operating income of 272 million yuan, an increase of 51.06% over the same period last year, and a net profit of 80 million yuan, an increase of 48.78% over the same period last year. 2021Q3, the company achieved an operating income of 110 million yuan, an increase of 36.12% over the same period last year, and a net profit of 34 million yuan, an increase of 62.70% over the same period last year.

Event comments:

Downstream demand continues to expand, leading to rapid revenue growth. In 2021, the downstream of FPC electrical signal testing includes consumer electronics, automotive electronics and communications; the original test demand is mainly for mobile phones and tablets in consumer electronics, but with the rapid growth of wearable device shipments, the test demand increases, driving the company's revenue to achieve rapid growth.

The expansion of new areas was accelerated, and R & D expenses increased by 98% compared with the same period last year. The company accelerates the layout of FPCA visual inspection and SiP chip testing, and the R & D investment is growing rapidly. In the first three quarters of 2021, the company's R & D expenditure was 65.08 million yuan, an increase of 98.37% over the same period last year. The company's R & D expenditure was 29.95 million yuan, an increase of 131.33% over the same period last year.

The gross profit margin was stable and the financial expenses fell sharply. In the first three quarters of 2021, the company's overall gross profit margin was 59.28%, up 0.11pct from the same period last year; the net profit margin was 29.06%, down 0.77pct from the same period last year; both were relatively stable. The company's financial expenses were-7.6519 million yuan, a decrease of 4.2513 million yuan compared with the same period last year.

Investment rating and valuation: we expect the company's 2023 net profit of 2021, 2022, and 2023 to be 1.28, 156 and 187 million respectively, corresponding to PE, which is multiple of 28-23-19, and maintains a "highly recommended" rating.

Risk hint: the growth rate of the company's automated test equipment is not as expected; the progress of research and development is not as expected; and the progress of business development in new areas is not as expected.