GF SEC: Indigenous Replacement of Scientific Research Instruments is Irreversible, Competent Enterprises are Expected to Stand out

GF SEC released a research report stating that there are abundant opportunities for domestic alternatives in the field of scientific research instruments under the context of countermeasures. Currently, with the escalation of trade frictions between China and the United States, scientific research instruments such as mass spectrometers can detect elements as small as metal and proteins with molecular weights of up to hundreds of thousands in blood. These instruments can be applied in the fields of food, environment, life sciences, medicine, new energy, and new materials. The wave of domestic replacements based on the demand for supply chain security is irreversible. In recent years, Chinese enterprises have continuously improved their research and production capabilities, with some companies having a complete range of products and possessing high-end research and development capabilities, making them likely to stand out in this wave. GF SEC's main points are as follows: Focused Photonics: A leading domestic alternative in the field of scientific research instruments with independent controllability The core subsidiary of the company, Spectra-Physics Technologies, has generated revenue of over 1.4 billion RMB in 24 years, with a net profit of 150 million RMB. Its revenue performance products are far ahead of domestic competitors in various scientific research areas. Their full-spectrum flow cytometer has achieved independent research and industrialization, and the semiconductor triple-quadrupole ICP-MS/MS is already being sold and delivered in the semiconductor industry. Furthermore, the company has established a trend of turnaround, with an estimated net profit attributable to shareholders of 200-230 million RMB in 24 years. The acceleration of collection has led to a net cash flow from operating activities of about 700 million RMB in 24 years. These positive changes reflect the company's escape from past operational difficulties caused by engineering-related businesses. As a domestic leader in high-end scientific research instrument manufacturing, the company is expected to sustain high growth under the trend of domestic alternatives and independent controllability. Solid Waste: Logic of dividend increase is being realized, and the layout of electricity and calculation integration is accelerating According to the 2024 annual report: CONCH VENTURE's dividend is 0.4 Hong Kong dollars per share (up 100% year-on-year), Grandblue Environment is expected to be 0.8 Hong Kong dollars per share (up 66% year-on-year), and Dynagreen Environmental Protection Group is 0.3 Hong Kong dollars per share (up 100% year-on-year). Solid waste companies are actively realizing an increase in dividends, and this is just the beginning with capital expenditures shrinking. In addition, with the unique advantages of "location advantage + carbon reduction + energy saving" in garbage incineration, the co-intelligent calculation center will usher in new development space. Improving the pricing mechanism of public utilities, the logic of water price increase continues to be realized On April 2, the Central Committee of the Communist Party of China and the State Council issued the "Opinions on Improving the Price Governance Mechanism," which aims to optimize the tiered water, electricity, and gas pricing systems for residents, promote incremental pricing for non-residential water use exceeding quotas, and introduce measurement-based charges for garbage disposal and optimize sewage treatment fee policies. Several cities including Shanghai, Guangzhou, Shenzhen, Xi'an, and Changsha, which have not adjusted prices for 6-8 years, have recently initiated water price hearings, with price increases reaching 0.1-1.1 yuan per cubic meter (6%-71%). With policy consolidation, it is expected to enter a new round of national price adjustment period. Risk Warning: Lower than expected orders and new business layout, risks of policy changes, and lower than expected dividends.