Main points of investment

Event content: on the evening of January 13, the company disclosed the performance forecast for 2022. In 2022, the company is expected to achieve a net profit of 40-428 million yuan belonging to the parent company, an increase of 169.94% RMB188.83% over the same period. Net profit after deducting non-recurring profits and losses is 3.28-356 million yuan, an increase of 136.49% RMB156.68% over the same period.

The growth rate of the company's performance in 2022 exceeded market expectations, which is expected to be related to the higher non-profit and loss in the fourth quarter. In 2022, the company's homing net profit is expected to increase by 169.94% Rue 188.83% compared with the same period last year, exceeding market consensus expectations. In terms of 22Q4 alone, the company achieved a net profit of 1.8-208 million yuan in the current quarter, an increase of 279.7%, 338.8% and 22Q4 over the same period last year. The growth rate of net profit in a single quarter is significantly higher than that of 22Q3 in a single quarter. For the reasons for the higher-than-expected growth in the company's 22Q4 net profit, we expect it to be related to non-profit and loss; compared with the 22-year net profit disclosed by the company and deducted non-net profit over the same period, it is estimated that non-profit and loss in 2022 is about 72 million yuan; while 2022Q3 non-profit and loss is only 7.5 million yuan, non-profit and loss in 2021 is only 9.5 million yuan, 22Q4 non-profit and loss quarter-on-quarter and year-on-year growth. According to the company's performance forecast, the substantial increase in non-profit and loss of 22Q4 is mainly due to the fact that subsidiaries Jiangsu Minglida and Guangdong Minglida have benefited from document No. 28 jointly issued by the Ministry of Finance, the State Administration of Taxation and the Ministry of Science and Technology in September 2022. The announcement on strengthening the pre-tax deduction for supporting scientific and technological innovation. New equipment and appliances purchased by high-tech enterprises during the fourth quarter of 2022 are allowed to be deducted in the calculation of taxable income. And allow 100% additional deductions before tax.

Excluding the impact of non-profit and loss, the company's performance still maintained rapid growth, the growth rate is basically in line with expectations. Assuming that excluding non-profit and loss, 22Q4 achieved a net profit of RMB 1.15-143 million, which is expected to increase by 164.6% and 228.8% over the same period last year. Compared with 22Q3, 22Q4, the quarterly growth rate of homing net profit is also significantly higher. The main reason is that the company's new production capacity has been released in the fourth quarter, and the overall downstream demand is still good, which makes the company's output value rise in the appropriate quarter. 1) on the supply side, Anhui Hanshan Project and Jiangxi Xinfeng Project signed in August 2022 agreed on the transition terms, and the production capacity was released in the fourth quarter. Among them, the Anhui Hanshan project agreed that by the end of 2022, the Anhui Hanshan Economic Development District Management Committee would coordinate 300-500 employees to ensure the smooth commissioning of the company's transition plant project; Jiangxi Xinfeng project agreed to rent the first and second floors of No. 1 factory building of 5G Wisdom Industrial Park, 60 dormitories, covering an area of about 3.5 square meters for transitional production; 2) on the demand side, the overall demand for downstream photovoltaic energy storage and new energy vehicles is expected to remain stable in the fourth quarter. Among them, BYD 22Q4, the core customer of new energy vehicles, sold 683400 new energy vehicles, accounting for 36.7% of global cumulative sales, and demand remained strong in the fourth quarter; while the energy storage market maintained rapid growth. In the United States, for example, the vice president of energy storage of the American Clean Energy Association said that due to the impact of rising energy prices, state decarbonization tasks and the inflation reduction Act, energy storage demand is at an all-time high.

Looking ahead, the company's supply and demand resonance drive is expected to continue in 2023, or will promote the performance to continue to improve. 1) from the point of view of capacity supply, the new projects have gradually entered the production period, and the company's capacity release is expected to be sufficient in 2023; among them, Anhui Hanshan Base and Jiangxi Xinfeng Base are under construction and are expected to continue to release new production capacity in 2023; the first phase of Chongqing Tongliang precision structure and equipment R & D project is expected to be officially put into production in January 2023, while the second phase of the project is about to begin construction and is expected to be put into production by the end of 2023. Although the Zhaoqing project is expected to be put into production by the end of 2024, it has been agreed that in the first phase, the lease plant will be used as a temporary transitional production base.

2) from the perspective of downstream demand such as photovoltaic energy storage and new energy vehicles, first of all, the photovoltaic market in Europe and the United States is expected to remain prosperous in 2023. The latest 2022Q4 solar market insight report released by the American solar industry association SEIA shows that the average annual growth of new photovoltaic installations in the United States will exceed 21% from 2023. The European Photovoltaic Industry Association expects the installed capacity of the EU photovoltaic system to reach 53.6GW in 2023, an increase of about 29%. Secondly, the domestic demand for new energy vehicles is expected to remain at a high level. According to the China Association of Automobile Manufacturers, China's new energy vehicles will continue to maintain rapid growth in 2023. Sales are expected to exceed 9 million units, an increase of about 30 per cent.

Investment advice: due to the disturbance of non-profit and loss, the company's performance growth in 2022 is higher than expected, assuming that excluding non-profit or loss, the company's performance growth in 2022 is basically in line with expectations. the main reason for the rapid growth in performance for the whole year and the fourth quarter is the gradual release of supply-demand resonance caused by superimposed demand. Looking forward to the whole year of 2023, the company's main applications downstream photovoltaic, energy storage, new energy vehicles and other industries are expected to remain prosperous, while with the successive construction and production of a number of bases, the company's new production capacity is expected to continue to be released. we tend to think that the supply and demand resonance drive may continue, and the company's performance is expected to maintain rapid growth. Taking into account the non-profit and loss in 2022, we slightly raised our profit forecast for 22 years, and expect earnings per share to be 1.01, 1.38 and 2.05 yuan per share respectively from 2022 to 2024, maintaining the Buy-B investment rating.

Risk tips: the risk of high customer concentration, the risk of decline in gross profit margin of the main business, the risk of fluctuation of raw material prices, the risk of economic loss caused by failure to fulfill the agreement in time, the risk of large scale of accounts receivable and inventory, the risk of exchange rate fluctuation, etc.