The performance in the first half of the year is under pressure, and the gross profit margin has declined: the company's main business is digital testing equipment and auxiliary testing services, which can provide customers with professional pressure, temperature and humidity calibration and testing solutions. The company's products are widely used in a wide range of fields, almost covering process industry, discrete manufacturing, rail transportation, medicine and medical care, scientific research, municipal and other aspects. The company's operating income in the first half of 2020 was 107 million yuan, down 14.31% from the same period last year; the net profit belonging to shareholders of listed companies was 21.5053 million yuan, down 39.84% from the same period last year. In the first half of the year, the company's operation was affected by the global COVID-19 epidemic, and its performance declined sharply. Adhering to its own development strategy of balanced internal and external development and dynamic matching of supply and demand, the company continues to strengthen the ability of closed-loop product development and customer experience to accelerate system empowerment, achieving operating income of 64.9883 million yuan per quarter in the second quarter of 2020. the year-on-year decline in revenue narrowed to-5.3% from-25.3% in the first quarter, and the net profit attributed to shareholders of listed companies was 13.5333 million yuan, down 44.98% from the same period last year. The net cash flow generated by the company's operating activities in the first half of the year was 11.0095 million yuan, down 20.50% from the same period last year, mainly due to the decline in sales revenue and the reduction of sales rebates. The company's gross profit margin for the first half of 2020 was 68.95%, down 2.10 PCT from the same period last year. Of these, the gross profit margin of digital stress testing products was 68.51%, a slight decrease of 2.00 PCT over the same period last year, and that of temperature testing products was 70.94%, a slight decrease of 3.87 PCT over the same period last year. At the same time, the company's expenses in the first half of the year decreased compared with the same period of the previous year, mainly affected by the decline in sales income and interest income, of which sales expenses, management expenses and financial expenses were 22.7106 million yuan, 14.3605 million yuan and-2.7977 million yuan respectively, with year-on-year increases of-7.40%,-5.02% and 19.99%, respectively.

Temperature detection products continue to grow at a high speed, speeding up the layout of the industrial Internet of things: in the first half of 2020, the sales revenue of the company's digital stress detection products was 87.905 million yuan, down 19.5% from the same period last year, and the sales revenue of temperature detection products was 19.1265 million yuan, an increase of 22% over the same period last year. In terms of composition, digital pressure testing products account for 82.13%, which still accounts for most of the income, and temperature detection products account for 17.87%. The company's temperature detection products mainly include intelligent dry body furnace, intelligent thermometer, intelligent precision constant temperature slot, intelligent precision verification furnace and automatic temperature verification system, etc. it can complete the field and laboratory calibration of contact temperature measuring instruments such as thermal resistance, thermocouple, temperature switch, vitreous thermometer and so on. Under the massive demand of the global market in the past decade, the company has accumulated a large number of pressure and temperature detection application technology. by constantly improving technological innovation, digital positioning of high value-added products, intelligent manufacturing upgrading, expanding the international market and extreme services, it has enhanced the overall business capacity and the transformation of technological achievements, and can quickly respond to the rational and individual needs of global customers during the period of transformation and upgrading. The coordinated development mechanism of "internal increase + extension" is the core of the planning. Focus on the instrument industry chain, focus on pressure and temperature calibration and testing, extend electrical testing, deploy the sensor field, improve industrial ecology with core technologies, realize company value and promote the orderly development of the industry, assist the rapid deployment of the Internet of things and the application of 5G industry.

The technology of high-end pressure products is the leading in the world, and the construction of the new factory area is orderly: in the first half of 2020, the company invested 28.88 million yuan in research and development, accounting for 27% of the operating income, an increase of 28.2% over the same period last year. Through the self-developed ACal cloud platform system, the company can realize the operation, maintenance and health management of user meters. The system supports docking with the user operation system, analyzes the energy efficiency of equipment and deeply excavates the data value, realizes the predictive maintenance of instruments and equipment, and helps the whole operation system to carry out self-organization and self-maintenance of its own logical relationship. The company's R & D team continues to integrate pressure sensor application technology and detection technology, adaptive control technology, dynamic environment compensation technology, dual-temperature zone temperature control technology, power grid fluctuation compensation technology, wireless bus technology, extended IT technology, NB-IoT Internet of things technology, etc. Annual R & D investment accounts for no less than 15% of revenue, in order to ensure the leadership and strong competitiveness of the company's products. At present, the technology of some high-end pressure products has been in the lead in the world. Based on the advantages of industry knowledge and testing technology, the company has implemented the SaaS software platform project. The SaaS cloud platform facilitates the sharing of users' data resources within the group and realizes the comprehensive cooperation of the internal value chain. SaaS cloud platform will be officially launched in 2021, through the "online +", "service +" model can more quickly capture and meet the needs of the industry pain points, while cloud computing, big data, AI and other cross-domain technologies will also help the company's product system penetration in the future. At the same time, in March 2020, the company officially started construction of the new factory area, which has been completed by 20%, with an investment of 14.1029 million yuan in this period. As one of the first industrial engineering projects with prefabricated architectural design in Beijing and one of the 300 key projects in Beijing in 2020, "Samp Xinyuan Yanqing New Plant Construction Project Phase I" mainly includes "MEMS Sensor Vertical Industry Intelligent Manufacturing Project", "pressure and temperature testing instrument Intelligent Manufacturing Project" and "Intelligent Calibration Product R & D Center Project". With the follow-up production of the new plant project, the company's capacity pressure will be effectively alleviated.

Investment advice: the company's performance in the first half of the year is under pressure, and temperature testing products continue to grow at a high speed. The company continues to increase R & D investment, the brand market position has been further strengthened, is expected to fully benefit from the wave of industrial Internet development. We predict that the EPS of the company from 2020 to 2022 is 0.52,0.63 and 0.75 yuan respectively, and the corresponding PE is 36.42,30.06 and 25.25 times respectively. Maintain the recommended rating.

Risk tips: overseas epidemic risk; international trade dispute risk; downstream demand downturn risk; fund-raising projects are not as expected; accounts receivable bad debt risk; technical personnel loss risk.