\u3000\u3000 Centre Testing International Group Co.Ltd(300012) (300012)
Event: the company disclosed the performance forecast of 2021, and the net profit attributable to the parent company was 730-760 million yuan, with a year-on-year increase of 26% – 32%; Among them, the net profit attributable to the parent company of Q4 was 176-206 million yuan, with a year-on-year increase of – 1.1% ~ 15%.
The company’s net profit attributable to the parent company achieved steady growth in the reporting period, which is expected to mainly benefit from the rapid development of Medicine (CXO business and the continuous improvement of certified laboratories of Functional Medicine & special inspection business), food (the testing demand of cosmetics market continues to increase due to the stricter supervision in China) Automobile (on the one hand, benefiting from the recovery of China’s automobile industry, on the other hand, the testing demand for new energy vehicles continues to increase due to the high landscape of the industry), construction engineering building materials (the demand for supply chain management is becoming stronger and stronger, and the leading advantage is becoming more and more obvious). At the same time, with the smooth implementation of the company’s fine management in recent years, the continuous optimization of lean production, the effective improvement of operation and management efficiency, and the steady growth of the company’s operating revenue and net profit. In addition, it is estimated that the impact of non recurring profit and loss on the company’s net profit in the reporting period is about 100 million yuan, mainly due to the receipt of a number of government subsidies and financial income in the reporting period. The non recurring profit and loss in the same period in 2020 is 98.3069 million yuan.
Refer to Eurofins to witness the rise of Chinese testing giants. According to the official website of Centre Testing International Group Co.Ltd(300012) at present, the company has more than 10000 excellent quality experts and has set up more than 150 laboratories in more than 10 countries and regions and more than 70 cities around the world. The service field of the company has an obvious trend of platform from healthy life to production and trade. From the perspective of the number of employees, the company is similar to Eurofins in 2012, and from the perspective of output value, it is similar to Eurofins in 2006. Eurofins also started from food and environmental testing. From 2000 to 2005, it set foot in pharmaceutical & Biotechnology. In 2014, it entered the field of clinical diagnosis with high per capita output value, and the business matrix is becoming more and more perfect. The per capita output value of Eurofins increased by 1.59 times from 1998 to 2020, and each increase cycle of per capita output value (2001-20072012-2020) is a new business volume cycle. For the company, it will be a good choice to quickly enter the emerging business fields, accelerate the laboratory construction through endogenous and extension methods, establish a platform testing service center, and cooperate with a reasonable salary system in the rapid development stage.
It is expected to maintain steady growth in 2022: 1) the company is still in the stage of improving quality and efficiency, and there is still room to improve the capacity utilization of stock laboratories; 2) At present, the company has completed the layout of main fields and become one of the few comprehensive testing enterprises in China. The diversification of downstream fields is conducive to maintaining steady growth; 3) The company’s medical laboratory is still in the process of expansion. From the historical data, the per capita output value of medical testing business exceeds that of traditional business (environmental testing and other fields). It is expected that the revenue of medical testing business will grow rapidly in the future; 4) Some new areas, such as cosmetics, 5g communications, automotive electronics / new energy and other related testing businesses, will still have considerable growth in the future.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 750 / 9.2 / 1.15 billion respectively, and the corresponding PE will be 49x / 40x / 32x respectively. It will be covered for the first time and given a “recommended” rating.
Risk tip: the environmental testing business is affected by the intensified competition in the industry. There is a risk that the profitability will decline too fast, and the load rate of new laboratories will rise too slowly, resulting in the risk of lengthening the loss cycle.