Performance review
The performance in 2022 slightly exceeded our expectations
The company announced its 2022 results: annual income of 4.66 billion yuan, year-on-year-11.7%; net profit of 340 million yuan, + 3.9%, deducting 310 million yuan of non-return net profit, + 30.3% year-on-year. Corresponding to 4Q22 income 1.07 billion yuan, year-on-year-31.7%; return net profit 120 million yuan, year-on-year + 174.1%, deducting non-return net profit 60 million yuan, year-on-year + 169.7%. The company's performance slightly exceeded our expectations, mainly due to a large increase in gross profit margin brought about by the decline in the cost of raw materials. The company announced a profit distribution plan, proposing a cash dividend of 0.33 yuan per share, with a total cash distribution of 159 million yuan, corresponding to a cash dividend rate of 46.7%.
Overseas destocking is a drag on lighting revenue, profitability benefits from lower raw material costs. 1) the company is the leading lighting export enterprise, accounting for 82% of the export revenue in 2022, which is affected by the overseas inventory removal cycle.
General lighting revenue in 2022 was 3.967 billion yuan (- 10.2% compared with the same period last year). 2) the company's overall 4Q22 revenue is-31.7% year-on-year and 3Q22-6.2% compared with the same period last year, mainly due to the high base of 4Q21 (before 4Q21, a large number of orders were shipped in 4Q21, and the revenue was + 24.3% compared with the same period last year). 3) the cost of raw materials has decreased, and the company's general lighting business has a gross profit margin of 16.7% (year-on-year + 3.2ppt) in 2022.
Multi-point development of vehicle business, customer development continues to promote. 1) in 2022, the company's vehicle business income was 434 million yuan (year-on-year + 54.6%), and the gross profit margin was 17.6% (year-on-year + 3.8ppt). 2) according to the company announcement, the company has passed the audit of SAIC, XPeng Inc. and other automobile enterprises and head Auto Zero Enterprise system, and recently the company has obtained the designated LDM project of Marelli, the headlight leader, and we estimate that the amount of the project in the order point will exceed 3 billion yuan. 3) We estimate the company's vehicle business income of 600 million / 1 billion yuan in 2023 / 2024.
Financial analysis: 1) the company's overall gross profit margin in 2022 is 16.4% (year-on-year + 2.9ppt), of which 4Q22 gross profit margin is 21.4% (year-on-year + 10.5 ppt), which basically returns to the 1H20 gross margin level. 2) under the influence of exchange rate fluctuations, the company's foreign exchange income was 45.14 million yuan in 2022 and 5.03 million yuan in the same period in 2021. 3) the company's net interest rate in 2022 is 7.3% (year-on-year + 1.1 ppt), of which 4Q22 net interest rate is 11.3% (year-on-year + 8.4 ppt). Under the influence of raw material cost / exchange rate and other factors, the company's profit shows full flexibility. 4) the net operating cash flow of the company is 929 million yuan in 2022 (- 104 million yuan in the same period in 2021). The cash flow has improved significantly and stepped out of the hoarding cycle of rising raw material costs in 2021.
Trend of development
We believe that the company's lighting business is expected to usher in overseas inventory inflection point, vehicles and other growth business continues to advance. The company has a strong European channel relationship, deep manufacturing accumulation, and has the foundation to expand new business.
Profit forecast and valuation
Keep the profit forecast for 2023max 2024 basically unchanged. The current share price corresponds to the price-to-earnings ratio of 22.9 for 2024 to 18.7 times earnings. Maintain an outperform industry rating and a list price of 22.0 yuan, corresponding to a price-to-earnings ratio of 28.2 times earnings in 2023 / 2024, which is 23% higher than the current share price.
Risk
Raw material price fluctuation risk; exchange rate fluctuation risk; vehicle business development is not as expected.