[Industry News] The policy strongly supports it, and domestically produced electronic measuring instruments have broad growth prospects.

On October 21, Guotai Junan Securities released a research report titled "Strong Policy Support, Broad Prospects for Domestic Electronic Measuring Instruments". The report stated that the domestic electronic measuring instrument industry started relatively late, with a low domestication rate and some key chips subject to restrictions. There is a high demand for domestication in the mid-to-high-end market. Recently, the country has introduced a series of policies, including subsidies, tax reductions, and special refinancing, to support the development of the domestic electronic measuring instrument industry.

1.Subsidy Policy: In September 2022, the State Council executive meeting proposed to implement phased encouragement policies for the purchase and renovation of equipment in colleges and universities, vocational colleges and training bases, hospitals, underground comprehensive pipe corridors, new infrastructure, industrial digital transformation, and small and micro enterprises. The central government will subsidize by 2.5 percentage points, with a term of 2 years. Schools and scientific research institutes are important downstream customers of the electronic measuring instrument industry, and the industry will significantly benefit from the increased purchases and renovations of equipment by colleges and universities and training bases.

2.Tax Reduction: In September 2022, the Ministry of Finance, the State Administration of Taxation, and the Ministry of Science and Technology jointly issued a notice to support technological innovation. The country will increase the pre-tax deduction for high-tech enterprises. For equipment and appliances purchased by high-tech enterprises from October 1, 2022, to December 31, 2022, the full amount can be deducted from the taxable income for the year, and 100% additional deduction can be implemented before tax. Previously, only equipment used for research and development by high-tech enterprises was allowed additional deductions. The phased preferential policy is no longer limited to equipment used for research and development, and the proportion of additional deductions has been increased from 75% to 100%. Benefiting from the tax reduction policy, downstream industries of electronic measuring instruments are expected to increase investment in the fourth quarter, purchase and upgrade equipment, and further stimulate industry demand.

3.Establishment of Special Refinancing for Equipment Renovation: According to a report from Guotai Junan Securities' financial team, the People's Bank of China established a special refinancing for equipment renovation with a quota of over 200 billion yuan on September 28. For qualified loans issued by financial institutions to listed projects from September 1 to December 31, the People's Bank of China will provide support in the form of equal amounts of funds based on the loan principal, with an interest rate not exceeding 3.2%. It focuses on supporting equipment purchases and renovations in 10 areas including education, health, cultural tourism, training bases, charging piles, underground comprehensive pipe corridors, new infrastructure, industrial digital transformation, energy conservation, carbon reduction, and upgrading in key areas. Banks will further increase long-term loans and special refinancing for equipment renovation in the manufacturing industry, benefiting multiple areas such as scientific research instrument R&D and manufacturing, and education technology equipment updates. This is expected to directly stimulate new demand for electronic measuring instruments. (Source: Guotai Junan Securities)

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