The performance of the first three quarters is under pressure, Q3 single quarter rapid growth: the company's main business is digital testing equipment, auxiliary testing services, can provide customers with professional pressure, temperature and humidity calibration, 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. In the first three quarters of 2020, the company achieved revenue of 188 million yuan, down 2.59% from the same period last year, realized net profit of 43.5906 million yuan, down 18.59% from the same period last year, and deducted 40.4691 million yuan from non-net profit, down 45.75% from the same period last year. Among them, Q3 achieved revenue of 81.0918 million yuan in a single quarter, up 18.87% from the same period last year, realized net profit of 22.0853 million yuan, up 24.12% from the same period last year, and deducted 21.3846 million yuan from non-net profit, up 31.59% from the same period last year. The net cash flow generated by the company's operating activities in the first three quarters was 27.078 million yuan, down 23.17% from the same period last year. At the same time, the company's sales expenses, management expenses and financial expenses in the first three quarters were 35.3789 million yuan, 23.3099 million yuan and 1.9887 million yuan respectively, with year-on-year increases of-12.56%, 3.52% and 133.99%, respectively.

Domestic market orders grow steadily, Q3 international market orders pick up rapidly: Q3 company increases its market expansion efforts to achieve the overall steady growth of pressure testing products and incremental growth of temperature testing products. The company strengthens its long-term planning and brand influence to capture changes in users' demand and structure. Orders in the domestic market grew by more than 6% in the first three quarters. Affected by delayed delivery of orders, domestic market revenue in the first three quarters was 111 million yuan, down 4.7% from the same period last year. Orders in the international market increased by 1.3% in the first three quarters compared with the same period last year, of which Q3 orders increased by 15% over the same period last year. The company has made great efforts to expand its business in the United States and improve its testing service capability. in the context of the epidemic and trade disputes, the United States achieved 10% order growth in the first three quarters, and the international market achieved revenue of 76.7262 million yuan in the first three quarters, an increase of 0.7 percent over the same period last year. 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.

Continuously increase R & D investment, orderly investment in new plant construction: the company's R & D team continues to carry out technology integration in the direction of pressure sensor application technology and testing 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., with annual R & D investment accounting for no less than 15% of revenue. At present, the technology of some high-end pressure products has been in the lead in the world. During the reporting period, the company continued to increase R & D investment against the backdrop of declining revenue growth, with R & D investment of 46.795 million yuan in the first three quarters, accounting for 24.9% of total revenue. The company's SaaS cloud platform will be officially launched in 2021, and 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 the construction of the new plant area, which is currently in the stage of orderly construction. The first phase of Sanpu Xinyuan Yanqing new plant construction project 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 three quarters is under pressure, Q3 performance has achieved rapid growth, and orders in the international market have picked up quickly. We predict that the EPS of the company from 2020 to 2022 is 0.40,0.48,0.57 yuan respectively, and the corresponding PE is 38.83,32.25,27.16 times respectively. Maintain the recommended rating.

Risk tips: overseas epidemic situation continues; international trade disputes continue; downstream demand is sluggish; fund-raising projects are not as expected; accounts receivable bad debt risk.