NCS TESTING TECHNOLOGY CO.(SZ:300797) AVIC Securities·2024-10-31 10:43Investment Rating - The investment rating for the company is "Buy" with a target price of 15.50 CNY, indicating an expected return of over 10% relative to the CSI 300 index in the next six months [5][25]. Core Views - The company has achieved a revenue of 722 million CNY in the first three quarters of 2024, representing a year-on-year increase of 15.71%. The net profit attributable to shareholders is 87 million CNY, up by 5.89% [5]. - The company is backed by the Steel Research Group and specializes in metal material testing, holding a strong position in the industry with comprehensive service capabilities [5][10]. - The company has seen stable growth in performance, with ongoing expansion in its business layout and improvements in product technology [5][10]. Summary by Sections Financial Performance - In Q3 2024, the company reported a revenue of 265 million CNY, a year-on-year increase of 13.62% and a quarter-on-quarter increase of 4.76%. The net profit for the same period was 38 million CNY, showing a year-on-year decrease of 0.73% but a quarter-on-quarter increase of 6.45% [5]. - The gross margin decreased to 45.95%, down by 2.45 percentage points, while the net margin was 9.39%, down by 0.63 percentage points [5]. Business Development - The company has expanded its laboratory operations, with new facilities in Qingdao and Shenyang now operational, and additional labs in various locations enhancing its service capabilities [8][10]. - The metal material testing industry is experiencing growth due to the increasing demand from various sectors, including aerospace, nuclear power, and new materials, providing significant market opportunities [10]. Research and Development - The company has maintained a growth in R&D investment, reaching 85 million CNY in the first three quarters of 2024, which is a 33.13% increase year-on-year. The R&D expense ratio has improved to 11.78% [8]. - The company’s R&D efforts are focused on enhancing testing capabilities and supporting the development of new materials and standards [10]. Employee Incentives - The company has implemented a stock incentive plan aimed at motivating employees, with performance metrics tied to net profit growth and return on equity [9]. The target for 2024 is a compound annual growth rate of net profit of no less than 17% [9]. Future Projections - Revenue projections for 2024-2026 are estimated at 1.13 billion CNY, 1.36 billion CNY, and 1.65 billion CNY, respectively, with net profits expected to reach 151 million CNY, 189 million CNY, and 242 million CNY [13].