\u3000\u3000 Donghua Testing Technology Co.Ltd(300354) (300354)
Key investment points
The performance of the local leader in structural mechanical performance test is in an accelerated rising period
The company is a leading data acquisition, testing and analysis system enterprise in China. Driven by continuous R & D investment, many core technologies are at the leading level in China. The company has accumulated a large number of high-quality customer groups in the fields of military industry & aerospace, engineering testing, scientific research and so on, Promote the performance into a period of rapid growth: ① revenue side: after 2018, the company seized the opportunity of military domestic substitution & independent and controllable, the revenue CAGR reached 23.68% from 2018 to 2020, and the revenue from 2021q1-3 reached 165 million yuan, a year-on-year increase of + 45.31%, accelerating the expansion of revenue scale; ② Profit side: from 2018 to 2020, the company’s net profit attributable to the parent CAGR reached 69.03%, and 2021q1-3 achieved a net profit attributable to the parent of 40 million yuan, a year-on-year increase of + 351.83%, significantly higher than the growth rate of the revenue side in the same period, and the profitability increased rapidly. The net interest rate reached 24.53% in 2020. Referring to the assessment objectives of equity incentive, the company’s revenue objectives from 2022 to 2025 are RMB 450 million, RMB 651 million, RMB 899 million and RMB 1.200 billion respectively. The revenue CAGR from 2020 to 2025 will reach 42.37%, and the growth potential can be seen.
The demand for scientific instruments continued to increase, and the implementation of policies and domestic substitution accelerated
There is a broad market for scientific instruments. In 2019, the global market scale of laboratory analytical instruments alone reached US $65.6 billion, of which the global market scale of China accounted for 15%. It can be seen that Chinese scientific instruments are a natural big track. ① Scientific instruments are the key components of national defense equipment. We estimate that the demand for scientific instruments in the military industry alone will reach 163.7 billion yuan in 2020. Benefiting from the improvement of the strategic position of weapons and equipment & independent and controllable, the demand for scientific instruments in China’s military industry is expected to continue to increase. In addition, with the increase of investment in experimental scientific research and the trend of “intelligent manufacturing” industry, scientific instruments also have broad growth space in the field of civil equipment in China. ② China’s high-end scientific instruments are still highly dependent on imports, and the instrument trade deficit reached US $25.7 billion in 2019. Under the continuous high R & D investment, China’s scientific instruments have the basis for partial domestic substitution at the technical end. In 2021m12, China issued presidential order No. 103, which aims to focus on promoting the localization of scientific instruments, and domestic scientific instruments will usher in the best development opportunities in military industry, scientific research institutions and other fields.
The main business of structural mechanics continues to grow rapidly, and PHM + electrochemistry opens up a growth space
While stabilizing the leading position of structural mechanical property testing system, the company actively expands the field of PHM and electrochemical workstation, and further opens the growth space. ① Structural mechanical property test: compared with the overseas leading American Ni, the company’s revenue and profit scale are obviously small, and there is still a large growth space. Driven by the high prospect of the military industry and independent control, it is expected to maintain rapid growth; ② PHM (fault diagnosis and health management): it is the core technology of modern weapons and equipment and has broad application prospects in civil markets such as intelligent manufacturing. The company is one of the few private enterprises in China that fully master the core technology of PHM and has great growth potential; ③ Electrochemical workstation: the new energy industry will open up commercial demand space. The company has formed a perfect product series, and has reached strategic cooperation with many universities. Industrialization is imminent.
Profit forecast and investment rating: we predict that the net profit attributable to the parent company from 2021 to 2023 will be RMB 88 / 139 / 203 million respectively, and the corresponding dynamic PE of the current stock price will be 67 / 43 / 29 times respectively. As a leader in the local structural mechanical property testing industry, the company will fully benefit from the general trend of military industry autonomy, superimpose a large number of new products, the company has outstanding growth, cover it for the first time, and give a “buy” rating.
Risk tips: industry competition intensifies, profitability declines, new business development & industrialization progress is less than expected, revenue recognition is seasonal, etc.
