\u3000\u3000 Suzhou Sushi Testing Group Co.Ltd(300416) (300416)
Event: the company disclosed the performance forecast for 2021, and the annual net profit attributable to the parent company was about 173-197 million, yoy + 40% ~ 60%; The net profit attributable to the parent company after deducting non-profit is RMB 153-177 million, yoy + 50.84% ~ 75.23%.
During the reporting period, the net profit attributable to the parent company increased rapidly, mainly benefiting from: 1) the rapid growth of environmental test equipment and environmental reliability testing business; 2) The proportion of environmental reliability testing business with high gross profit margin in the main business income further increased; 3) The profitability of IC testing business has been greatly improved. Among them, the environmental test equipment business mainly benefits from the large amount of testing demand for military industry and new energy vehicles; Environmental reliability testing business mainly benefits from the expansion of the company’s laboratory; The IC testing business mainly benefited from the large demand for automotive electronic testing, and the gross profit margin and net profit margin improved significantly.
Based on the advantages of equipment, environmental reliability and semiconductor detection work together. With the progress and development of society, the testing service industry is an industry gradually developed with the continuous progress of testing technology, based on the continuous improvement of the whole society’s requirements for the quality of products, the level of living health, the safety of production and life, and the protection of social environment. According to the data of the national certification and Accreditation Administration, the market scale of China’s testing industry has increased from 139.9 billion RMB in 2013 to 358.6 billion RMB in 2020, with a compound growth rate of 14.4%, exceeding the GDP growth rate during the period (8.0%) and the growth rate of the global testing service market (11.0%). The company started from mechanical environment experimental equipment. At present, the capacity of the equipment is expanded from mechanical environment to climate (temperature, humidity, etc.), biology, chemistry and other indicators. The value of a single unit continues to increase, but the business is relatively stable, and the volume * price maintains a growth rate of 15% – 20%; In 2006, the company began to set foot in environmental reliability testing service, which is the result of the company’s equipment advantages. At present, 15 testing laboratories have been put into operation. From 2011 to 2020, the company’s environmental reliability testing business revenue increased from 23 million to 463 million yuan (CAGR = 39.8%), and the market share increased from 0.5% in 2013 to 1.2% in 2018, There is still much room for improvement in the future. In 2019, Yite (Shanghai) was acquired to enter the high growth field of integrated circuit testing. In 2020, test equipment accounted for 36.34% of the company’s revenue, test services accounted for 39.10%, and semiconductor testing revenue accounted for 14.37%.
It is expected to maintain rapid growth in 2022: 1) the company’s environmental test equipment business is expected to continue to benefit from the growing demand for military industry and new energy vehicle testing; 2) On the one hand, the IC testing business benefits from the high demand for automotive electronic testing, on the other hand, the company’s expanded Suzhou semiconductor testing base has contributed new increment; 3) The environmental reliability testing business has benefited from the company’s laboratory expansion bonus in recent two years.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 190 / 260 / 340 million respectively, and the corresponding PE will be 49x / 36x / 28x respectively. It will be covered for the first time and given a “recommended” rating. Considering that Suzhou Sushi Testing Group Co.Ltd(300416) is expected to maintain a high performance growth rate and a high-quality business model in the testing industry in the next few years, the PE valuation of 45x for 22 years is given to the company, and the corresponding target price is 41.85 yuan (= 0.93 * 45 = 41.85).
Risk warning: the commissioning progress of the new project is lower than the expected risk, and the downstream demand slows down
