Event Overview: On March 28, 2023, the company released its 2022 annual report. It achieved operating income of 336 million yuan in 2022, an increase of 32.24% over the previous year, achieved net profit of 96.09 million yuan, an increase of 59.03% over the previous year, and achieved net profit of 75.99 million yuan after deducting non-return mother's net profit of 75.99 million yuan, an increase of 66.99% over the previous year; Q4 achieved operating income of 116 million yuan in a single quarter, an increase of 41.67% over the previous year, achieving net profit of 343.883 million yuan, an increase of 86.87% over the previous year. RMB 28.20.2 million, an increase of 130.79% over the previous year.
The release of industrial wireless products has increased, and HaaS products have made a breakthrough.
In 2022, the company's industrial switching products achieved revenue of 255 million yuan, an increase of 24.70% over the previous year, industrial gateway products achieved revenue of 33.91 million yuan, an increase of 6.81% over the previous year, and industrial wireless products achieved revenue of 139 million yuan, an increase of 60.35% over the previous year. In terms of revenue structure, the company changed from mainly switching products to balanced switching and wireless development. Furthermore, the HaaS platform launched in 2022 uniformly hosts digital business products in hardware form to solve the problem of reliable and consistent connectivity. The product made good progress, and the company transitioned from a product-based to a platform-based enterprise.
Profit margins improved markedly under rigid cost investment.
The company's gross margin fell 2.16pct year-on-year in 2022. Mainly due to the volume of industrial wireless products, the gross margin of this product was 50.75%, lower than that of industrial exchange products (61.56%) and industrial gateway products (59.41%), causing short-term pressure on overall gross margin. In 2022, the company's total sales, management, and R&D expenses increased 13.1% year on year, lower than the revenue growth rate. The three rates dropped sharply by 6.2 pct year on year, resulting in a profit margin increase of 4.82 pct to 28.62%, mainly due to the company's early R&D and sales side investment to see initial results.
Continued investment in technology, AI empowers the industrial Internet.
The company side: Invest in core technology, with R&D expenses of 576.697 million yuan, R&D expenses of 17.18%.
R&D results include cloud-based collaborative AI platform, edge AI application development tools, edge AI intelligent gateways, next-generation switch software platform SWOSA9, high-end rack 10-gigabit core switches, industrial Internet TSN switches, etc. At the same time, the company continues to increase its HaaS platform construction efforts to consolidate its core competitiveness through new technologies and platform-based capabilities such as AI and TSN. Industry side: The launch of the RedCap commercial module reduces terminal costs and power consumption, and accelerates the implementation of 5G into the industrial Internet. The company's wireless gateway products are expected to benefit.
Investment suggestions: Optimistic about rising demand for the industrial Internet, the company continues to cultivate the stock market, strives to expand the incremental market, consolidate the competitiveness of AI products, and land orders for HaaS platforms and TSN-related products. The company's net profit for 23-25 is estimated to be 128 million yuan/168 million yuan/209 million yuan respectively. The current market value corresponds to the PE multiplier 41x/32x/25x. Maintain a “Recommended” rating.
Risk warning: Industrial Internet demand falls short of expectations; RedCap's large-scale commercialization falls short of expectations.