High and low voltage electrical equipment testing leader, qualification, technology, equipment advantages to build industry entry barriers: the company is a national independent third-party integrated electrical testing organization, focusing on electrical testing for more than 50 years, the family controlling shares are relatively concentrated. China Inspection Group is the second shareholder of the company and forms a synergy with the company as a strategic investor. At present, the company has formed a number of core competitiveness, such as qualifications, technology and equipment, built barriers to industry entry, and formed a low-voltage to high-voltage full coverage testing capability.
High R & D increases per capita output value, and the performance will meet the inflection point after the peak of depreciation in 2020: the company's performance has grown steadily in the past three years, with operating cash / net profit as high as 4.6 times in 18 years. At present, the company's ROE level is low. From the perspective of DuPont analysis, the company's net interest rate and equity multiplier are higher in the test companies, but the asset turnover ratio is lower than that of other comparable companies, mainly because the company's assets are relatively heavy, capital expenditure is high, and the growth rate of depreciation provision has slowed down in recent years. As the company passes through the depreciation peak, the performance will meet the inflection point. The company's 18-year R & D / income is 8.8%, and the per capita output value has increased significantly. With the increase in capacity utilization, the output value of a single laboratory is also expected to increase.
Power appliances testing market concentration is high, the company's high and low voltage electrical appliances testing market share is the first:
Compared with other testing industries, the detection growth rate of power appliances is high and the market concentration is high, and the market pattern is stable. According to the 2018 China testing Statistics report, the size of the electric power testing industry in 18 years is about 5.6 billion yuan, a year-on-year growth rate of 55%. The market share of the Academy of Electrical Sciences is more than 10%, which is significantly higher than the 1.3% market share of the State Inspection Group, the leader in building materials testing. At present, the per capita power generation level in China is still low, and the demand for power construction is strong, which helps to drive the demand for upstream electrical testing. And the company continues to expand new energy business recently, with great potential for growth.
Investment suggestion: it is estimated that the operating income in 19-21 will be 80,000,000,000 yuan respectively, with a year-on-year growth rate of 13.4%, 18.4% and 15.9% respectively. The net profit of homing in 19-21 years was 2.08 / 271 million yuan respectively, with a year-on-year growth rate of 30.0%, 25.0% and 30.2% respectively. The average PE of the comparable company in 2020 is about 35 times. Considering the stable market pattern of power testing and the company's competitive advantage, the company is valued at 35 times PE in 2020, with a corresponding reasonable value of 9.45 yuan per share.
Risk tips: depreciation amortization affects performance; downstream demand uncertainty; credibility decline.