Incidents:
On April 17, the company released its 2022 annual report. The company achieved revenue of 14.675 billion yuan for the full year of 2022, +14.94% year on year, and achieved net profit of 411 million yuan to the mother, +51.44% year on year, 335 million yuan after deduction, +40.19% year on year. Among them, 2022 Q4 achieved operating revenue of 3.681 billion yuan, +6.31% year on year, and net profit of 75 million yuan returned to the mother, -9.48% year on year, 23 million yuan after deduction, and -69.92% year-on-year, mainly due to the deduction of government subsidies and non-recurring income obtained from corporate hedging operations. The performance was generally in line with expectations.
The main business is growing steadily. Polymer has long-term growth potential. The company's power products business achieved revenue of 8.503 billion yuan in 2022, +10.28% over the same period last year, mainly due to the clearance of low-end production capacity and increased industry concentration. The polymer materials business performed well, achieving revenue of 4.654 billion yuan, +23.55% year on year, and gross margin of 15.42%, +2.61 pct year on year. Mainly due to the release of the company's production capacity and active expansion of overseas markets, overseas sales revenue was +51.98% year-on-year. At the end of 2022, the Huzhou 200,000 ton production capacity plant was fully put into operation, and the Hangzhou 20,000 ton ultra-high pressure phase II line began trial production. The company's industrial layout is gradually improving, and it is expected to maintain a high growth trend in the future.
Equity incentive plan released, demonstrating confidence in long-term development
On April 17, the company announced the draft restricted stock incentive plan for 2023. It plans to award 10.35 million restricted shares. The initial stock grant price is 5.1 yuan/share. In terms of performance assessment, the return on net assets in 2023-2025 is not less than 4.47%; the turnover ratio of accounts receivable in 2023-2025 is not less than 3.67 times; the annual growth rate of net profit after deducting non-return to the mother in 2023-2025 is not less than 70%/90%/110%, and no lower than the 75th value of the target enterprise or the average of the same industry for all three years. It is estimated that the company's management expenses for 2023-2027 will be increased by 966.50/1656.86/1242.64/670.63/1,9725 million yuan. Equity incentives bind the core backbone, which shows that the company has strong confidence in future long-term development.
Continued investment in R&D to promote the localization of high-voltage cable materials and robot cables 2022, the company's R&D expenses were 612 million yuan, +29.32% year on year, and continued to promote research and development of high-voltage cable materials. Currently, high-voltage ultra-clean XLPE insulation materials have been developed, and HVDC cable materials and low-smoke halogen-free cable materials for offshore platforms have entered the pilot stage. It is expected to break the full import pattern of high-voltage submarine cable materials and achieve domestic substitution in the future. Industrial intelligent equipment cables focus on deepening cooperation with leading customers, expanding production capacity, and consolidating the competitive advantage of this field in the domestic market.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue in 2023-2025 to be 163.15/180.90/20.708 billion yuan respectively (the original value in 2023-2024 was 173.22/20.664 billion yuan), the corresponding growth rate was 11.18%/10.88%/14.47% respectively, and the net profit of Guimo was 606/835/1,143 million yuan (the original value in 2023-2024 was 705/948 million yuan). The corresponding growth rate was 47.45%/37.82%/36.94%, EPS, respectively They were 0.58/0.81/1.10 yuan/share, respectively, and the 3-year CAGR was 40.63%. Since the company is a leading cable integration company, we will give the company 19 times PE in 2024, maintaining the target price of 15 yuan. Maintain a “buy” rating.
Risk warning: 1) Localization of cable materials falls short of expectations; 2) demand slows down; 3) Market competition intensifies