Incident: The company announced its 2022 full-year results and 2023Q1 results: (1) The company achieved operating income of 999 million yuan in '22, a year-on-year decrease of 12.22%; realized net profit of 96.4456 million yuan, a year-on-year decrease of 46.19%.
(2) In Q23, the company achieved operating income of 416 million yuan, an increase of 59.58% over the previous year, and achieved net profit of 70.3 million yuan, an increase of 38.91% over the previous year. (3) Non-recurring profit and loss in '22 was 277.683 million yuan, mainly comprised of government subsidies of 133.652 million yuan and investment income of 1970.67 million yuan, including current profit and loss.
The reduction in direct material costs in '22 led to an increase in gross margin, and the increase in R&D expenses and sales expenses ratios led to fluctuations in net interest rates. (1) The company's gross margin increased from 38.11% in '21 to 40.65% in '22, mainly driven by direct material cost reductions and changes in order structure. (2) Net interest rates fell from 15.91% in 2021 to 9.75% in 2022, mainly due to increases in R&D expenses and sales expenses rates. (3) R&D expenses were 151 million yuan in '22, an increase of 16.58% over 129 million yuan in '21; the R&D expenditure rate increased from 11.47% in '21 to 15.23% in '22, and R&D expenses were raised to reserve overseas projects. (4) Sales expenses fell from 74.2948 million yuan in '21 to 72.4327 million yuan in '22, a decrease of 2.51% over the previous year, and the sales expense ratio increased from 6.59% in '21 to 7.32% in '22.
Smart transportation revenue increased dramatically in '22. Due to the external objective environment and settlement cycle, repayment of some of the company's projects was delayed. At the revenue product classification level, smart port inspection system solutions accounted for 82.98% of revenue in '22, a decrease of 24.48% over the previous year; intelligent transportation and other revenue accounted for 16.87%, an increase of 319.17% over the previous year. Net cash flow from operating activities fell from 148 million yuan in '21 to 168 million yuan in '22; accounts receivable increased from 694 million yuan at the beginning of '22 to 906 million yuan at the end of '22. The receivables turnover ratio in '22 was 123.6%, and the receivables turnover rate in '21 was 191.89%.
The company's ecosystem continues to expand, and AIoT welcomes new product lines. The company steadily promoted diversified business strategies, gave full play to the advantages of the company's technology and capabilities, and expanded its product line. Following a series of products in the port industry, various smart terminal products for video surveillance, robotics, vehicle networking, and identity authentication have also joined the company's AIoT ecosystem, laying a solid foundation for continuously improving the business layout. At the same time, the volcano plan uses AIGC technology to generate a large amount of low-cost, highly effective data of various types, with a view to obtaining better model performance in scenarios where real data is limited. The relevant technology has already been applied to various visual or NLP models and products.
Investment advice: It is expected to achieve operating income of 23.9/29.1/3.55 billion yuan in 23-25, and the net profit attributable to the mother is 43/52/640 million yuan respectively, corresponding to PE 24.20/16X, maintaining the “increase in holdings” rating.
Risk warning: Repeated epidemics have put pressure on short-term performance, product and technology research and development risks, risk of declining profitability, and risk of impairment of accounts receivable.