Key points of investment:
The company released its 2022 annual report, and the performance was in line with expectations. Revenue increased dramatically. The company achieved total revenue of 3.483 billion yuan in '22, +64.07% year-on-year, of which 22Q4 achieved revenue of 1,317 billion yuan, +83.9%/+77.4% over the same period last year. The growth rate of performance was slower than revenue. The company achieved net profit of 149 million yuan in '22, +13.7% compared to the previous year. Of this, 22Q4 achieved net profit of 501 million yuan, +692.63%/+48.6% over the same period last year; after excluding the impact of equity payments, net profit for the year was 159 million yuan, +21.4% year on year.
Intelligent equipment: The project is progressing at an accelerated pace, and orders are sufficient to support continued revenue growth. In terms of revenue, the revenue of the intelligent equipment business in '22 was 2,398 billion yuan, +45.57% year on year, of which 22H2's revenue was 1,478 billion yuan, +78.1% year on year. The improvement of the epidemic in the second half of the year led to an increase in the speed of project progress. At the same time, new energy orders from OEMs since '21 have gradually entered the acceptance stage. In terms of profitability, the gross margin of the intelligent equipment business for the whole year was 20.4%, -5.4 pct over the previous year. Mainly, the lengthening of the project cycle under the pandemic has led to an increase in costs when confirming revenue. In terms of orders, orders were added 3.666 billion yuan throughout the year, +22.7% over the same period last year. Currently, orders in hand have reached 5.223 billion yuan. On the basis of consolidating traditional advantageous customers, the company developed new customers such as Volvo, Wanxiang, and Sunwoda; the power battery/battery equipment business began to gain strength, with new orders exceeding 400 million yuan. Looking ahead to 2023, the newly established Cell Equipment Division will further expand the breadth of business, leading to a continuous increase in orders; sufficient orders on hand will provide strong support for revenue growth; optimization of the epidemic and improved efficiency of the company's internal digital transformation will effectively shorten the project delivery cycle, thereby improving profitability.
Motor electronic control parts: The scale of business is growing rapidly, and profitability is under pressure in the short term. In terms of revenue, the motor and electronic control business generated revenue of 1,085 million yuan in '22, +128.1% year on year, with a delivery volume of 159,000 units, +94.5% year on year. Revenue growth was higher than shipment volume, mainly due to the expansion of the product structure from the A00 level to a higher level and the company's development of a new delivery model for core components.
In terms of profitability, the gross margin of electric motor control for the whole year was 9.7%, -0.9 pct over the previous year. Due to large fluctuations in raw material costs, scale effects have occurred, and the improvement in profitability brought about by product upgrades has not yet been reflected. On the customer side, while maintaining the original customers, the company obtained new customer targets such as Ideal, Geely, NIO, and Shangtong Wuling, further driving product upgrades.
Looking ahead to 2023, the target obtained by the company in the early stages will enter the mass production stage, which is expected to continue to drive a doubling of revenue; and the implementation of fund-raising production capacity will effectively increase the self-production rate of the company's products, combined with falling raw material prices, the reflection of product scale effects, and product structure optimization, to drive the profitability of motor and electronic control products from various aspects.
The strategic characteristics of “two-wheel drive” continue to inject vitality into the company's growth. In the short term, years of accumulation in the equipment field will introduce resources for the company's parts business to expand the Hefei industrial chain and customers across the country, and it is expected to see more targeted projects in 23; in the medium term, the company will carry out a three-year digital transformation to optimize efficiency and improve decision-making and management capabilities in the context of rapid revenue growth; in the long-term dimension, intelligent equipment, as a forward-looking industry, will help the company understand industry development and transformation trends in advance, providing expansion and reserves for the development of the third growth curve.
Investment analysis opinion: In the short term, the NEV industry is under pressure from factors such as demand overdrafts and the impact of fuel vehicle price cuts, etc., but in the long run, it still has a rapidly growing industry beta, and the company has sufficient technical and customer resource accumulation, as well as its unique “two-wheel drive” α, and continues to be optimistic about the certainty of its continued growth. Taking into account factors such as the slowdown in OEMs' production expansion, delays in some targeted mass production times, and industry demand for cost reduction, etc., the revenue forecast for 23-24 was lowered to 51.6/6.99 billion yuan (previous value was 52.2/713 billion yuan), increasing 25-year revenue by 8.86 billion yuan; net profit forecast for 23-24 was lowered to 26/47 million yuan (previous value was 30/5.0 billion yuan), adding 25-year net profit of 620,000 yuan; corresponding PE was 22/12/9 times, maintaining the purchase rating.
Risk warning: The industry has overcapacity, sales of new energy vehicles fell short of expectations, and business expansion fell short of expectations.