CTI's adjusted performance is lower than expected, looking forward to long-term growth

The performance of active expansion has increased, the business integration of subsidiaries and the disposal of long-term equity investments have resulted in lower-than-expected performance. The company announced that the net profit attributable to shareholders of listed companies is expected to increase by 20% over the same period of the previous year–50%, the company made a profit of 121.8454 million yuan–152,306,800 yuan. Although the main business maintained a good growth trend and the operating income increased rapidly compared with the same period of the previous year, the company's gross profit margin declined, affecting the performance. At the same time, due to the need for long-term development, the company has carried out comprehensive business and financial integration of Hangzhou Huaan Nondestructive Testing Technology Co., Ltd., and it is expected that the operating performance in 2017 will decline compared with the same period of the previous year. In addition, during the reporting period, the Company received approximately RMB 11.73 million in capital-guaranteed and floating-income wealth management income, approximately RMB 9 million in losses from disposal of long-term equity investments, and received a number of government subsidies. The non-recurring gains and losses for the same period last year amounted to RMB 21.7232 million. , 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 has been completed, showing confidence, the stock price has been inverted, and the margin of safety is sufficient. The company's shareholders meeting in June 2017 passed the first phase of the employee stock ownership plan, with a total number of no more than 54 participants (including some directors, senior managers and company backbones), a total capital of no more than 54 million yuan, and a lock-up period of 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, the transaction amount was 49.5 million yuan, and the average transaction price was RMB 4.8199 Yuan/share, the current stock price is upside down, and the margin of safety is sufficient. With the gradual liberalization of domestic third-party testing, and multiple policies to promote market-oriented reforms, third-party testing companies have ushered in opportunities. The domestic testing industry is in a stage of rapid growth, and the market size in 2015 has reached 250 billion. In the field of non-compulsory licensing business, third-party testing has been gradually released, and in 2015, the market exceeded 100 billion yuan. At present, the competition in the testing market is fierce, with state-owned enterprises occupying the main body and private enterprises having a small market share. The national market-oriented policy has been gradually implemented, and the testing industry has been regarded by the State Council as one of the eight high-tech service fields for national development. Large-scale structural adjustment will be ushered in in the future, and market-oriented reform will bring opportunities for third-party enterprises. Investment rating and valuation: According to the performance forecast, we lowered the company's 2017-19 net profit forecast by 1.4, 1.9, 243 million, (original 2.38, 3.35, 454 million), corresponding to 17, 18 years PE is 52 times and 38 times. We believe that the company will benefit from the market-oriented reform of the testing industry and seize the first-mover advantage by virtue of its leading private position in the testing industry and its excellent reputation accumulated over the years. Multinational comprehensive testing service provider. The company has obvious competitive advantages, clear strategic thinking, further third-party inspection orders in the future, high flexibility in performance growth and market value growth, maintaining“Accumulate”rating.

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