This report is read as follows:

The commissioning of new materials in 2022 has led to an increase in gross profit margin, exchange gains and government subsidies have increased the company's profits; the glove business is steadily expanding production, new materials and new production capacity is about to be released, and profits are expected to grow rapidly in 2023.

Main points of investment:

It is recommended to maintain the EPS forecast from 2023 to 2024 and increase the EPS forecast for 2025 to 1.10, 1.55 and 1.95 yuan. Considering the greater flexibility of the company's performance, it will be given 23 times higher than the industry average of PE in 2023, maintaining the target price of 25.3 yuan and maintaining the "overweight" rating.

Event: 2022 revenue / return net profit / deduction for non-return to home is 893 million, respectively, 1.22 million, compared with the same period last year.-5.9%, 31.5%, 5.3%. Among them, Q4 single-quarter revenue / return net profit / deduction of non-return to mother is 2.08Universe 0.20 million, respectively, compared with the same period last year.-9.1% Lashi 4.6% Universe 7.7%. The performance is in line with expectations.

The commissioning of new materials in 2022 led to an increase in gross profit margin, exchange gains and government subsidies to thicken the company's profits. In 2022, due to factors such as high overseas inflation, US MCR Safety orders, the largest customer, decreased by about 82 million (- 34 per cent compared with the same period last year). However, the company actively expanded the domestic market, making up for some of the decline in overseas orders, so revenue was only-5.9 per cent year-on-year. Benefiting from the commissioning of UHMWPE fibers, the gross profit margin in 2022 was from + 2pct to 25.0% (of which Q4 was 34.5%, year-on-year + 7pct), and gross profit increased by 5.6 million compared with the same period last year. At the same time, due to the increase in the exchange income of the US dollar in the current period, the financial expenses decreased significantly (- 20 million compared with the same period last year), which led to a 13.67 million reduction in the expense side compared with the same period last year, so the deduction was + 5.3% to 87 million over the same period last year. In addition, the company received 40 million of government subsidies in 2022, so its net profit was + 31.5% compared with the same period last year.

The glove business is expanding steadily, the capacity of new materials is about to be released, and profits are expected to increase rapidly in 2023.

Long. 1) Security gloves: the existing production capacity is 18 million dozen. The first phase of Hengyue Industrial Park (72 million dozen) is expected to be put into production in mid-2023 and is expected to reach production in the next three years, helping the company to open up domestic and overseas emerging markets. 2) New materials: the first phase of the project contributes 3.43 million tons (600t production capacity) in 2022. At present, the second phase of the project (2400 tons) is gradually put into production and is expected to be sold to the outside world. We estimate that there will be an increase of about 2000-2500 tons in 2023, which is expected to greatly increase the company's performance.

Risk hint: customer expansion is not as expected, and production progress is not as expected.