\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 54 Donghua Testing Technology Co.Ltd(300354) )
Event: the company released the annual report of 2021. In 2021, the company realized an operating revenue of 257 million yuan, a year-on-year increase of 25.22%; The net profit attributable to the parent company increased by 8003900 yuan year-on-year; The net profit deducted from non parent company was 770391 million yuan, with a year-on-year increase of 73.57%.
Steady growth in performance, significant improvement in profitability and improvement in operating cash flow: in 2021, the company's revenue was 257 million yuan, slightly lower than expected, mainly due to the impact of the epidemic on the company's order delivery. The company strives for progress while maintaining stability, and continues to promote product R & D, lean management, cost reduction and efficiency increase. While achieving growth in operating performance, its profitability has been significantly improved. On the one hand, the company's gross profit margin maintained an upward trend, increasing by 1.71pct to 67.79% compared with 2020; On the other hand, the sales expenses and management expenses decreased by 2.85pct and 2.87pct respectively compared with 2020, and the net profit margin increased by 6.60pct to 31.13% compared with 2020. In addition, the company's net cash inflow from operating activities in 2021 was 27.48 million yuan, an increase of 30.1% year-on-year over 2020. In 2021, the company launched the equity incentive plan with the operating income from 2022 to 2025 as the assessment objective at the company level, demonstrating the company's determination to expand its business.
New products continue to develop and are expected to contribute growth momentum to the company: Based on the core technologies such as "small signal amplification and anti-interference system solution" accumulated in the original business field, the company launched two new products: electrochemical analysis system and PHM equipment intelligent management platform. Electrochemical workstation is an essential intelligent testing and analysis scientific instrument for the research of chemical reaction process in terms of electrochemical analysis and testing, corrosion process analysis and new energy battery performance analysis. The company's dh7000 series products are sold to many university customers and actively explore the field of new energy. The products are expected to continue in large quantities. The PHM system business of the company is derived from the structural mechanics test business, and makes two-way efforts in the military and civil fields. In the field of military industry, the company has qualifications related to equipment scientific research and production, and its technology is on par with foreign capital. It has made great efforts to localize and actively promote the application of ships, UAVs, aeroengines and other fields. In the civil field, the company launched an intelligent maintenance management platform for equipment, which can reduce costs and increase efficiency for the factory. In 2021, with anti-interference testing technology as the core competitiveness, intelligent testing instrument products as the application main line, and overall testing technology solutions and value-added services as the extension direction, while improving and upgrading the existing products, the company promoted the research and development of new products such as custom measurement and control system and special large-scale experimental software, and many new products entered the stages of customer trial and small batch production. The continuous research and development of new products and their introduction to the market are expected to strongly drive the company's performance growth.
Profit forecast, valuation and rating: Donghua Testing Technology Co.Ltd(300354) is the leader in the subdivided field of scientific instruments, fully benefiting from the great development dividend of scientific services and interconnected PHM. The new product PHM system and electrochemical workstation have been officially introduced to the market, and the performance inflection point has come. We maintain the company's forecast of net profit attributable to parent company of RMB 147 million and RMB 210 million from 2022 to 2023, and increase the forecast of net profit attributable to parent company of RMB 294 million in 2024. The corresponding EPS from 2022 to 2024 are RMB 1.06, RMB 1.52 and RMB 2.13 respectively, and the corresponding PE are 30x, 21x and 15x respectively, maintaining the "buy" rating.
Risk warning: the promotion of new product projects does not meet the expected risk; Risk of late delivery; Risks of changes in internal and external business environment; Risk of core technology disclosure.
