China Test Testing adjusted performance lower than expected, looking forward to long-term growth

The performance of active expansion has risen, the business integration of subsidiaries, coupled with the disposal of long-term equity investment, the performance is lower than expected. The company predicts that the net profit attributable to shareholders of listed companies is expected to increase by 20%-50% over the same period of the previous year. Rapid growth, but the company's gross profit margin has declined, affecting performance. At the same time, in the long-term development needs, the company has carried out a comprehensive business and financial integration of Hangzhou Huaan Nondestructive Testing Technology Co., Ltd., and it is expected that the operating performance of 2017 will be lower than the same period of the previous year. In addition, during the reporting period, the company received approximately RMB 11.73 million in capital-guaranteed floating income financial management income, approximately RMB 9 million in losses from the disposal of long-term equity investments, and received a number of government subsidies. The non-recurring gains and losses in the same period last year were RMB 21,723,200. , It is estimated that the impact of non-recurring gains and losses on the company's net profit is 38.6 million yuan.　　　　 The employee stock ownership plan is completed, showing confidence, the stock price is upside down, and the margin of safety is sufficient. The company’s general meeting of shareholders in June 2017 passed the first phase of the employee stock ownership plan. The total number of participants does not exceed 54 (including some directors, senior managers and the company’s backbone), and the total capital does not exceed 54 million yuan. The lock-up period is 12 months. . As of August 30, 2017, the functional company purchased a total of 10.27 million shares of the company through the asset management plan in the secondary market, accounting for 0.61% of the company's total share capital, with a transaction amount of 49.5 million yuan, and an average transaction price of RMB 4.8199 Yuan/share, the current stock price is upside down, and the margin of safety is sufficient.　　　　 The domestic third-party testing is gradually liberalized, and multiple policies are promoting market-oriented reforms, and third-party testing companies are ushering in opportunities. The domestic testing industry is in a stage of rapid growth, with the market size reaching 250 billion in 2015. In non-compulsory licensing business areas, third-party testing is gradually liberalized, and in 2015 it broke through the 100 billion market. The current testing market is highly competitive, with state-owned enterprises occupying the main body, and private enterprises having a small market share. The national marketization policy is gradually implemented, and the testing industry has been regarded by the State Council as one of the eight high-tech service industries that the state will focus on. The future will usher in large-scale structural adjustments, and market-oriented reforms will bring opportunities for third-party companies. Investment rating and valuation: According to the performance forecast, we lowered the company's 17-19 net profit forecasts of 1.4, 1.9, and 243 million (originally 2.38, 3.35, and 454 million), corresponding to a PE of 52 times in 2017 and 18. 38 times. We believe that with the help of the private leading position in the testing industry and the excellent reputation accumulated over the years, the company will benefit from the market-oriented reform of the testing industry and seize the first-mover advantage. In the future, it will further expand the company's scale through mergers and acquisitions and expansion, and build it into a country with a wider coverage. Multinational comprehensive testing service provider. The company has obvious competitive advantages and clear strategic thinking. In the future, third-party inspection orders will be further increased, and performance growth and market value growth will be highly elastic, and the 'overweight' rating is maintained.

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