Donghua Testing, the leading domestic structural mechanical properties research and overall solution provider for electrochemical workstations, was founded in 1993. The company has always focused on the R&D, production and sales of intelligent measurement and control systems, with structural mechanical performance testing and analysis systems (accounting for 58.68% of revenue in 2023, same below), structural safety online monitoring and defense equipment PHM systems (18.03%), intelligent equipment maintenance management platforms based on PHM (6.32%), and electrochemical workstations (15.36%). Analysis systems, control and analysis software platforms. The company's products are all independently developed, designed and produced, and have independent intellectual property rights.
Steady revenue growth and improved profitability
The company's performance maintained a steady growth trend. From 2021 to 2023, the CAGR for revenue and net profit to mother was 21.3%/4.7%, respectively, with year-on-year changes of +3.03%/-27.94% in 2023.
2024Q1 achieved revenue/net profit to mother of 1.04 billion yuan respectively, an increase of 45.16%/165.70% year-on-year respectively. In terms of profitability, the company's 24Q1 gross margin/net profit margin was 67.27%/26.20%, respectively, up 1.78/11.89pct year-on-year, and sales/management/financial expense ratios changed by -3.33/-4.69/+0.1pct, respectively. Overall control was good.
The PHM market is developing rapidly, and the company is expected to simultaneously expand the market on both military and civilian sides. According to Yidu data, China's PHM market size in 2021 was 3,578 billion yuan. Based on the penetration rate in various industries, there is still room for further improvement. At the same time, the potential space for aviation and military industry is huge, and the market size will increase to 16.137 billion yuan in 2026 with a CAGR of 36.48%. While providing guarantees for the safe operation of defense equipment and infrastructure such as tank engines, armored vehicles, radar vehicles, and airborne vehicles, the company is also vigorously expanding in civilian fields such as water engineering, port machinery, shield machines, oil fields, wind power, etc., which is expected to further consolidate the company's core competitiveness.
Six-dimensional force sensors are the core components of humanoid robots. The company is expected to benefit from its growth. Six-dimensional force sensors are usually installed on the wrist, ankle, sole, or hand, and play an important role in movement control planning, posture adjustment, and force sensing. The company has the underlying technical conditions to develop six-dimensional force sensors. The sensor products have advantages such as high reliability, high stability, and excellent indicators, and are suitable for various harsh environments. Currently, the company's six-dimensional force sensors are in the small-batch trial production stage, and it is expected that the future will benefit the core as the humanoid robot market grows.
Investment advice and profit forecasting
Donghua Testing is a leading overall solution provider for structural mechanical properties research and electrochemical workstations in China. Traditional businesses are expected to achieve rapid growth in the civilian PHM business, and six-dimensional force sensors in the R&D process in emerging businesses are expected to benefit from the amplification of humanoid robots. Donghua Test's 2024-2026 revenue is expected to be 6.12/8.11/1,026 billion yuan, up 61.72%/32.54%/26.57% year on year, net profit to mother of 1.76/2.49/315 million yuan, up 100.45%/41.37%/26.81% year on year, 1.27/1.80/2.28 yuan for EPS, and 24.22/17.13/13.51x for the first time coverage.
Risk warning
Risk of increased competition in the industry; risk of input and output of new products and projects; risk of market demand falling short of expectations; risk of falling short of expectations in debt recovery