\u3000\u30 Xuchang Ketop Testing Research Institute Co.Ltd(003008) 87 Pony Testing International Group Co.Ltd(300887) )
Comprehensive third-party testing leader, accelerating performance growth
Pony Testing International Group Co.Ltd(300887) is a rare comprehensive third-party testing leader in China. Its business covers testing, environment, medicine and consumer goods testing. The company has complete qualifications such as the National Certification Commission and the State Administration of market supervision. It has widely participated in well-known projects such as the Winter Olympic Games and the 70th anniversary of the founding of the people’s Republic of China. It has been highly recognized by the government and large and medium-sized enterprise customers. Its qualification and credibility have built a core barrier. In 2021, the company’s revenue was 2 billion yuan, a year-on-year increase of + 40%; The net profit attributable to the parent company was 218 million yuan, with a year-on-year increase of + 33%. The CAGR in 20162021 was 20% and 17% respectively, benefiting from the easing of capacity bottleneck after listing and the acceleration of performance growth.
The third-party detection passes through cattle and bears, and the domestic leader is preferred
The business model of third-party testing is similar to that of the whole industry chain credit rating company, with fast and stable growth. It passes through cattle and bears and has broad development prospects. In 2020, the scale of China’s third-party testing market was 191.8 billion yuan, a year-on-year increase of + 13%. From 2013 to 2020, cagr19%, and the growth rate of the industry was more than twice that of GDP. The competition pattern of the industry is fragmented and intensive. In 2020, the Centre Testing International Group Co.Ltd(300012) share of China’s leading testing companies was only 1%, Pony Testing International Group Co.Ltd(300887) only 0.4%, and the total share of foreign capital was only 6.3%. From 2016 to 2020, the income of five Chinese listed testing companies was cagr24%, which was higher than the industry average, and the leading share had great potential to increase and grow.
Gold track bull stocks are frequently detected, and overseas detection leaders SGS, Eurofins, Intertek and bv have outperformed the market for a long time. The valuation center was 30 times from 2011 to 2021, enjoying the market valuation premium. Compared with the single digit growth rate of foreign-funded leading income, the growth rate of domestic-funded leading income remains above two digits. Based on the excellent growth, we believe that domestic-funded testing leading should have a premium compared with foreign-funded, and the reasonable valuation is about 50 times.
Optimistic about the performance growth rate of 30% in the next three years and welcome the opportunity
We are optimistic that the compound growth rate of the company’s net profit attributable to the parent company from 2021 to 2024 will be about 30%, which is significantly higher than the compound growth rate of the company from 2016 to 2020 of 13%, mainly based on the following four points: ① laboratory capacity expansion and elimination of factors that suppress performance growth in the early stage; ② Opportunities for fast-growing segments of the track, such as cro / cdmo, medical testing, special industries and environmental and reliability testing, electronic and electrical testing, cosmetics testing and human efficacy testing, automobile / new energy vehicle testing, etc; ③ M & a performance; ④ The growth rate of fixed costs such as employees and depreciation slowed down, and the profitability increased.
In July 2021, the company launched the restricted stock incentive plan. The target income and net profit gagr of 20202024 were 27% and 28% respectively, higher than the previous gagr of 15% and 13% respectively in 20162020, demonstrating growth confidence.
Profit forecast and investment rating: we predict that the net profit attributable to the parent company from 2021 to 2023 will be 218 / 289 / 373 million yuan respectively, with a year-on-year increase of 33% / 33% / 29%, and the current market value corresponds to 40 / 30 / 24 times of PE respectively. The company’s performance growth accelerated to meet Davis’s opportunity. In 2022, the target market value space is 14.5 billion and the target price is 105 yuan. It is rated as “overweight” for the first time.
Risk warning: the epidemic situation repeatedly affects the normal operation; Macroeconomic and policy changes; The commissioning process of the laboratory is not as expected; The synergy effect after M & A is less than expected; Brand and credibility are adversely affected.
