The 2022 results are in line with our expectations

The company released its 2022 annual report, which is in line with previous performance reports: 2022 revenue increased 32.9% year-on-year to 466 million yuan; Guimu's net profit increased 59% year-on-year to 122 million yuan.

Development trends

The proportion of confirmed robot business in the nuclear industry increased in 2022. By sector, 1) Nuclear industry robots: revenue increased 979% year on year to 120 million yuan, and the revenue share rose rapidly to 25% from 3% in 2021, mainly due to rapid growth in downstream spent fuel processing related contract orders in 2021 and fulfillment in 2022. The gross margin of this business was 50.8%; 2) Nuclear industry intelligent equipment: revenue was basically flat at 299 million yuan, and gross margin increased 1.2ppt to 45.1%; 3) Other businesses: revenue increased 79% year-on-year to 36.38 million yuan; 4) Non-nuclear: due to low base effect, gross profit margin increased 79% year-on-year to 36.38 million yuan; 4) Non-nuclear: due to low base effect, gross profit margin Increase 24ppt to 40.6%. We expect various businesses to blossom more than once in 2023.

The revenue structure has changed, and profitability has improved markedly. The company's gross profit margin (excluding taxes and surcharges) increased by 3 pct to 45.1%/47.0% in 4Q22/2022 due to the increase in the share of high-profit robots in the nuclear industry. In 2022, the company's sales/management/finance expense ratio was +0.6/0.0/-1.6ppt. The final net profit margin increased 4.3ppt to 26.2% year-on-year, and profitability increased markedly.

It is proposed to simply increase it again, and dilute the share capital by no more than 30%. At the end of February this year, the company announced that it plans to invest in the construction of a new base. In order to meet capital requirements, the company issued a simple further increase plan. The number of shares to be issued shall not exceed 30% of the company's total share capital before issuance, with an upper limit of 211 million yuan for high-end nuclear technology and equipment manufacturing base projects (proposed to use 181 million yuan) and supplementary working capital (0.3 billion yuan). The issue price is not less than 80% of the average stock trading price for the 20 trading days before the pricing benchmark date. According to company estimates, the project is expected to add more than 200 million yuan in annual sales revenue. We expect that this fixed increase will help the company's business reserves in the fields of intelligent nuclear chemical equipment and refrigeration crucible engineering prototypes. The equipment business is expected to contribute more revenue growth.

Profit forecasting and valuation

We keep our 2023/2024 net profit forecast unchanged. The current closing price corresponds to 2023/2024 of 48.2/35.2X. We maintain our target price of 89.6 yuan, which corresponds to 49.2/36.0X in 2023/2024, with room for an increase of 2%, and maintain outperforming the industry rating.

risks

The risk of revenue fluctuations in a single quarter, the progress of the spent fuel disposal industry falling short of expectations, etc.