Soochow Securities·2026-02-14 10:24Investment Rating - The report recommends focusing on leading companies in the testing service industry, particularly those with strong capital, management, and research capabilities, such as Huace Testing, Guangdian Measurement, and Sutest [7] Core Insights - The testing service industry is closely related to macroeconomic growth, with significant market space and stable growth. The global testing service market is projected to reach approximately 2.3 trillion RMB by 2024, with a CAGR of about 6% from 2021 to 2024 [4][24] - China's testing service industry is expected to outpace GDP growth, with a projected market size of around 487.6 billion RMB in 2024, reflecting a CAGR of approximately 10.5% from 2015 to 2024 [5][24] - The industry is experiencing a structural shift, with emerging sectors such as AI, new energy vehicles, and commercial aerospace driving new demand for testing services [6][33] Summary by Sections Industry Overview - The testing, inspection, and certification (TIC) industry serves various sectors, including consumer goods, industrial products, and pharmaceuticals, covering all stages from R&D to production and distribution [16] - The demand for testing services is highly correlated with macroeconomic trends, with growth driven by global trade, increasing quality and safety standards, and stricter regulations [20][24] Market Performance - In 2025, the testing service sector in China reported revenues of 30.4 billion RMB, a year-on-year decline of 7%. Excluding companies with high medical testing proportions, the sector saw a 3% growth [5][57] - Leading companies like Huace Testing, Guangdian Measurement, and Sutest outperformed the industry average, with revenue growth rates of 7%, 12%, and 9% respectively in the first three quarters of 2025 [57][62] Emerging Opportunities - New technologies and industries, such as low-altitude economy and semiconductor sectors, are rapidly developing, creating new testing service demands. The investment threshold for laboratories in these areas is significantly higher than traditional sectors [6][33] - The report emphasizes the importance of focusing on leading companies that possess brand, capital, and management advantages to capitalize on these emerging opportunities [6][7] Competitive Landscape - The testing service market in China is characterized by a large number of small and medium-sized enterprises, with over 96% of testing institutions being micro-sized, which poses risks due to their limited capacity to withstand economic fluctuations [50][51] - The report predicts a trend towards consolidation in the industry, with resources increasingly concentrating in leading firms as smaller entities face challenges [50][51]