\u3000\u30 Jinzai Food Group Co.Ltd(003000) 12 Centre Testing International Group Co.Ltd(300012) )
Event 1: the company disclosed the 2021 annual report. In 2021, the revenue was 4.329 billion yuan, with a year-on-year increase of 21.34%; The net profit attributable to the parent company was 746 million yuan, a year-on-year increase of 29.19%; Net profit deducted from non parent company was 647 million yuan, with a year-on-year increase of 34.90%. The company has previously released a performance express, which is in line with market expectations.
Event 2: the company disclosed the first quarterly report of 2022. The company’s Q1 revenue in 2022 was 908 million yuan, a year-on-year increase of 19.16%; The net profit attributable to the parent company was 120 million yuan, a year-on-year increase of 19.80%; The net profit deducted from non parent company was 104 million yuan, with a year-on-year increase of 49.02%, which was located in the median value of the previous performance forecast, in line with market expectations.
Key investment points
The growth of the core sector is balanced and stable, and it is optimistic that the medical sector will become a new growth pole
From the perspective of the company’s branch business in 2021, the income from life sciences / medicine and medical services / industrial products / consumer goods / trade security testing was RMB 2.087/3.69/4.95/574 billion respectively, with a year-on-year increase of + 17.09% / + 78.13% / + 15.40% / + 23.27% / 19.58%, and the core section maintained a stable growth trend. (1) Life science sector: the food sector has become the largest sector of the company, the implementation of the group’s key customer strategy has been smooth, and the defects of traditional income in the off-season in the first quarter have been improved; The environmental sector benefited from the third national soil survey and is expected to grow faster in the next three years. (2) Consumer goods sector: benefiting from the increased penetration of new energy vehicles, the company’s automobile testing has developed rapidly and obtained many head customer certifications and orders. (3) Industrial products sector: the measurement field is gradually liberalized to private enterprises, and the company has increased its layout to usher in opportunities. (4) Pharmaceutical and medical sector: the sector with the fastest growth rate of the company has a serious capacity bottleneck and is expected to contribute to a new growth pole in the future. We expect Shanghai and Kunshan phase II laboratories to be put into operation by the end of 2022. Looking forward to the future, with the expansion of the company’s segments, the ramp up of laboratory capacity in Shanghai and Kunshan phase II, the improvement of market penetration of new energy vehicles and the implementation of the third national soil general inspection, the company’s high growth is expected to continue in 2022.
Continuous optimization of profitability and excellent cash flow performance
In 2021, the company’s comprehensive gross profit margin was 50.83%, with a year-on-year increase of + 0.87pct. We judge that the fluctuation of gross profit margin is mainly affected by the structure of products and customers; The net profit margin attributable to the parent company rose to 17.24%, a year-on-year increase of + 1.05pct; The total expense rate during the period was 33.08%, with a year-on-year increase of -1.19pct. The company’s refined management continues to advance, and the profitability trend is upward. In 2021, the net operating cash flow of the company was 1.073 billion yuan, a year-on-year increase of + 15%, and the net cash ratio reached 1.4, with excellent collection and profit quality.
The third-party detection is the leader of the whole category, the repurchase announcement shows confidence, and the valuation bottom ushers in medium and long-term layout opportunities. China’s third-party detection is a sunrise industry with the characteristics of fast growth, stable growth and crossing cattle and bears. In 2020, the scale of China’s testing industry was 358.6 billion yuan, maintaining a steady double-digit growth throughout the year, with an average annual compound growth rate of 15% during the 13th Five Year Plan period. As the leader of China’s third-party testing, the share of China in 2020 is only 1%, and the growth space is large enough. On March 19, 2022, the company issued a repurchase announcement. The number of shares to be repurchased is 3-5 million, and the price of repurchased shares shall not exceed RMB 25 / share. Considering that the valuation center of overseas leading SGS and Eurofins is 30 times, and the performance of China test is expected to maintain a stable growth rate of more than 20% in the future to digest the valuation, we believe that the company has ushered in medium and long-term layout opportunities.
Profit forecast and investment rating: we maintain the company’s net profit forecast of 943 / 1136 million yuan from 2022 to 2023 and 1.415 billion yuan in 2024, corresponding to 37 / 31 / 25 times of PE, maintaining the “overweight” rating.
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.
