Incident Debang Lighting released its 2022 annual report. In 2022, the company achieved operating income of 4.657 billion yuan, a year-on-year decrease of 11.69%; the net profit of the mother was 340 million yuan, an increase of 3.89% over the previous year.
Net profit not returned to the mother was 305 million yuan, an increase of 30.28% over the previous year. 2022Q4 achieved revenue of 1.07 billion yuan in a single quarter, a year-on-year decrease of 31.66%, and achieved net profit of 120 million yuan to the mother, an increase of 174.07% over the previous year. Net profit not returned to the mother was 0.6 billion yuan, an increase of 169.73% over the previous year. The company distributed a cash dividend of 3.3 yuan (tax included) to all shareholders for every 10 shares, with a total cash dividend of 159 million yuan. The corresponding cash dividend ratio was 46.65%.
General lighting revenue has declined, and the automotive business is developing rapidly. The company's revenue fell 11.7% year on year in 2022. The main reason was that the general lighting business fell year-on-year due to low demand and high inventories. Since April 1, 21, Debang Plastics was no longer consolidated, which also had a certain impact on the year-on-year decline in revenue. The lighting business segment achieved operating revenue of 4.156 billion yuan during the reporting period, a decrease of 11.39%. The company's revenue declined a lot in the fourth quarter alone, mainly because the company had a higher base for the same period in '21. 21Q4 Shipping pressure slowed, company orders were shipped centrally, and revenue increased 24.28% year-on-year. The company's automotive business developed rapidly, achieving revenue of 434 million yuan, an increase of 54.61% over the previous year. In terms of structural parts business, the company has developed new customers such as Zero Run, Sanli, and Hella. Production capacity has been greatly improved after production line technology improvements and plant expansion, and the business has developed relatively rapidly. The controller business was affected by the chip shortage, and the growth rate fell short of expectations, but as BMS products are ready for mass production, LDM products have also achieved an important breakthrough in the ODM business, and the rapid development trend of the in-vehicle business is expected to continue in the future. Looking at subsidiaries, Debang Auto Lighting and Shanghai Liangqin achieved revenue of 215 and 180 million yuan respectively, up 66.95% and 93.70% year-on-year. Affected by the epidemic, the company's lighting construction business achieved revenue of 189 million yuan, a year-on-year decrease of 30.99%. By region, the company's domestic and foreign revenue was 842 and 3.806 billion yuan respectively, down 27.21% and 7.34% from the previous year. Among them, export revenue accounted for 81.73%, an increase of 3.83 PCT compared to '21.
Increased profitability. The company's gross sales margin in 2022 was 16.76%, an increase of 3.01 PCT over the previous year. The gross margin for the fourth quarter alone was 21.36%, an increase of 10.54 PCT over the previous year. By product, the company's gross margins for general lighting, automotive business, and lighting engineering construction were 16.68%, 17.62%, and 16.44%, respectively, with year-on-year changes of 3.15, 3.77, and -0.12PCT. We believe that the main reason for the increase in gross margin is the lower cost of raw materials. Looking at period expenses, the company's sales, management, finance and R&D expenses in 2022 were -4.36%, 6.53%, N/A and 2.78%, respectively. The expense rates were 3.1%, 3.71%, -1.69%, and 3.36%, respectively, and 0.24, 0.64, -0.92 and 0.47PCT over the previous year. The company's financial expenses have declined significantly. The main reason for this is the increase in exchange earnings in the current period. The company's exchange profit and loss in 2022 was -451399 million yuan, compared to -5033,300 yuan for the same period in 2021. Taken together, the company's net sales interest rate in 2022 was 7.31%, an increase of 1.09PCT over the previous year. Among them, the 22Q4 net sales interest rate was 11.28%, an increase of 8.39 PCT over the previous year. The net cash flow from the company's operating activities in 2022 was 929 million yuan, a significant improvement compared to '21. The main reason was the improvement in the company's inventory.
Investment advice: The company is a leading general lighting company. It stabilizes the general lighting business while focusing on “vehicle controller+vehicle lighting” to achieve rapid development of the in-vehicle business. The company's net profit from 2023-2025 is estimated to be 409, 516 and 631 million yuan, and the corresponding EPS is 0.86, 1.08 and 1.32 yuan, maintaining the “recommended” rating.
Risk warning: risk of changes in raw material prices; risk of exchange rate fluctuations; risk of increased market competition.