The company achieved revenue of 2,277 million yuan (-13.95%) in 2022, net profit of -26 million yuan (-117.60%), and net profit of -26 million yuan (-120.81%) after deducting non-net profit. The 2023 Q1 revenue was 389 million yuan (+5.40%), and net profit to the mother was -36 million yuan (+3.23%). With the improvement of the external environment and continuous breakthroughs in overseas markets, the 2023 performance is expected to recover rapidly. Maintain the buy rating.

Key points to support ratings

Affected by the external environment throughout the year, overseas revenue bucked the trend and rebounded steadily in the first quarter. 2022Q4's revenue was 631 million yuan (-22.52%), net profit of -39 million yuan (-184.67%). The decline in 2022 performance was mainly due to the external environment affecting market demand. The progress of some projects fell short of expectations, and revenue increased slightly in Q1 2023. Overseas markets bucked the trend. In 2022, overseas revenue of printing and scanning products was 335 million yuan (+13.91%), overseas revenue of smart self-service terminals was 198 million yuan (+61.19%), and overseas revenue of the financial industry was 211 million yuan (+112.60%). Overall overseas revenue increased 39.01% year-on-year, accounting for 39.24% of revenue (+15.95pct). Major overseas customers continued to break through, and markets in South America and Southeast Asia expanded rapidly.

Intelligent self-service terminals have long-term development resilience, and AI applications are accelerating. The growth rate of smart courier cabinets is slowing down, but there is clear room for long-term development: according to post office data, the national express delivery business volume grew steadily by 110.58 billion units (+2.1%) in 2022. According to Diansubao's “2022 China Logistics Technology Market Data Report”, China's smart courier cabinet market size in 2022 was 42.1 billion yuan (+16.62%), and it is expected that future growth will accelerate with improvements in the external environment. At the same time, overseas markets are also in a period of acceleration. The domestic market for smart pickers is developing rapidly and is highly concentrated. Overseas markets are in the early stages of development, and there is still plenty of room for development. Furthermore, demand for autonomous terminals such as medical care, government affairs, and railways is also rising steadily. The application of AI technology such as face and voice recognition, interactive experience, etc. in intelligent autonomous terminals also continues to accelerate, and continuous breakthroughs in AI technology and applications are expected to bring new development opportunities.

The full financial product chain layout, and major bank customers continue to break through. In 2022, the financial industry achieved revenue of 456 million yuan (+17.53%). In terms of products, new products such as card making modules, cash assistants, business libraries, and smart lockers were launched, and the product line continues to be rich. On the customer side, in 2022, they successively won bids for teller machines and clearers projects such as Postbank, Bank of Communications, CCB, and ICBC, achieving breakthroughs in all six major national banks in clearing machine products. The provincial agricultural credit market continues to break through. A total of winning projects have covered 80% of the agricultural credit market. Breakthrough progress has been made in overseas markets, supplying more than 2,000 deposit machines to leading global financial integrator customers, launching new products such as CRS ATMs and cash tellers, and continuing to expand into the South American and Asia-Pacific markets.

valuations

Net profit from 2023 to 2025 is estimated to be 1.42/173/205 million yuan, EPS is 0.22/0.26/0.31 yuan (affected by the macro environment in 2022, with a corresponding downward adjustment of 17-23% in 2023-2024), corresponding to PE 35/29/24 times, respectively. Optimistic about the rapid recovery of the company's performance and maintaining the buying rating.

The main risks faced by ratings

Macroeconomic fluctuations; increased market competition; business expansion fell short of expectations.