donghua test(300354) 华创证券·2024-10-23 05:08Investment Rating - The report maintains a "Strong Buy" rating for the company with a target price of 45.1 RMB, compared to the current price of 34.71 RMB [1] Core Views - The company's Q3 performance was under pressure, with revenue of 0.78 billion RMB, up 25.67% YoY, and net profit of 0.25 billion RMB, down 33.72% YoY, likely due to long order confirmation cycles [1] - The company's order growth is strong, with inventory and contract liabilities increasing by 19.1% and 28.11% YoY respectively by the end of Q3 2024 [1] - High profitability continues, with gross and net profit margins of 66.55% and 27.82% respectively for Q1-Q3 2024, up 0.18pct and 0.88pct YoY [1] - The company is well-positioned to benefit from domestic substitution and increasing penetration of PHM (Prognostics and Health Management) in the defense and industrial sectors [1] Financial Performance - For Q1-Q3 2024, the company achieved revenue of 3.54 billion RMB, up 15.88% YoY, and net profit of 0.99 billion RMB, up 20.3% YoY [1] - The company's revenue is expected to grow to 6.03 billion RMB in 2024, 7.96 billion RMB in 2025, and 10.17 billion RMB in 2026, with YoY growth rates of 59.3%, 32.1%, and 27.8% respectively [1] - Net profit is forecasted to reach 1.88 billion RMB in 2024, 2.49 billion RMB in 2025, and 3.26 billion RMB in 2026, with YoY growth rates of 114.5%, 32.4%, and 30.7% respectively [1] Industry Outlook - The domestic substitution trend and increasing PHM penetration in the defense and industrial sectors are expected to drive the company's growth [1] - The company's structural mechanics performance testing systems are well-positioned to benefit from the modernization and intelligent development of weapons and equipment [1] - The company's electrochemical workstations are expected to gain market share due to policy support and competitive advantages in pricing and after-sales service [1] Valuation - The company is valued at 25X PE for 2025, with a target price of 45.1 RMB [1] - The company's P/E ratio is expected to decrease from 55 in 2023 to 26 in 2024, 19 in 2025, and 15 in 2026 [2] - The company's P/B ratio is expected to decrease from 7.2 in 2023 to 5.8 in 2024, 4.6 in 2025, and 3.6 in 2026 [2]