First Read Suzhou Sushi Testing Q226 results slightly missed, mainly on equipment drag

研报英文原文证据摘录

First Read Suzhou Sushi Testing Q226 results slightly missed, mainly on equipment drag

Forecast returns

Forecast price appreciation 41.3%

Forecast dividend yield 1.3%

Forecast stock return 42.6%

Market return assumption 6.8%

Forecast excess return 35.8%

Company Description

Founded in 2007 and listed on the Shenzhen Stock Exchange in 2015, Sushi Testing is a

domestically-leading provider of environment and quality reliability testing and verification,

and comprehensive analysis solutions. Sushi is committed to R&D and production of

environmental testing equipment. The company provides customers with a full value chain

that covers chips, components and finished products. With strong R&D capability and leading

technical expertise, the company has led and participated in the formulation of many national

and industry standards.

Valuation Method and Risk Statement

We derive our price target for Sushi Testing using DCF methodology.

We believe the company faces the following downside risks:

The impact of policy on the TIC industry: The industry is highly exposed to government policy,

which determines how rapidly it can develop. Current uncertainty surrounding the

liberalisation of testing services poses some risk for the company. In addition, most of Sushi's

downstream sectors – integrated circuits, aerospace and aviation, electronic and electrical

appliances, oil and chemicals, rail, automobiles, special industries, shipbuilding and colleges,

universities and research institutes – are considered strategic, foundational industries in

China. As such, any adjustments in policies for these industries and the broader economy

could impact Sushi's operations.

Potential failure to integrate acquirees: M&A is a common approach for international TIC

majors to enter new fields quickly.