Key points of investment

The company released its 2022 annual report: achieved revenue of 1,714 million yuan, an increase of 15.96% over the previous year; realized net profit of 283 million yuan, an increase of 3.29% over the previous year; net profit returned to the mother after deduction was 265 million yuan, a decrease of 2.27% over the previous year. The basic earnings per share were 0.75 yuan/share, a decrease of 27.18% over the previous year; the weighted average return on net assets was 18.61%, a decrease of 10.03 pct over the previous year.

The fourth quarter of 2022 achieved revenue of 377 million yuan (-19.70%), with net profit attributable to the mother of -0.03 billion yuan (-103.51%) respectively. In the first quarter of 2023, the company achieved revenue of 497 million yuan, a year-on-year increase of 5.59%, an increase of 31.89% over the previous year; realized net profit of 114 million yuan, an increase of 31.01% over the previous year, an increase of 117 million yuan over the previous year; net profit of 120 million yuan after deducting non-return mother's net profit of 112 million yuan, an increase of 31.22% over the previous year; and basic earnings per share of 0.27 yuan/share, a decrease of 18.18% over the previous year.

By industry, in 2022, aviation, aerospace, shipping and other special sectors achieved revenue of 998 million yuan, an increase of 13.51% over the previous year, accounting for 58.27% of total revenue, a gross profit margin of 63.89%, an increase of 2.98 pct over the previous year; the communications and network sector achieved revenue of 651 million yuan, an increase of 19.85% over the previous year, accounting for 38.01% of total revenue, a gross profit margin of 24.80%, a year-on-year decrease of 1.95pct.

By product, in 2022, module power supplies achieved revenue of 700 million yuan, a year-on-year decrease of 12.38%, accounting for 40.83% of total revenue, a year-on-year decrease of 13.21pct, a gross profit margin of 60.26%, an increase of 5.86pct over the previous year; customized power supplies achieved revenue of 452 million yuan, an increase of 73.06% over the previous year, accounting for 26.38% of total revenue, an increase of 8.70 pct over the previous year, a gross profit margin of 56.13%, a decrease of 2.79 pct over the previous year; high-power power power power supplies and power supply systems achieved revenue of 448 million yuan Yuan increased 33.31% year on year, accounting for 26.14% of total revenue, an increase of 3.40 pct over the previous year, gross profit margin of 21.29%, a decrease of 4.75 pct over the previous year; integrated circuit products achieved operating revenue of 53 million yuan, an increase of 209.72% over the previous year.

In 2022, the company's total period expenses were 452 million yuan, an increase of 25.55% over the previous year. Period expenses accounted for 26.35% of revenue, an increase of 2.01 pct over the previous year; of this, R&D expenses were 260 million yuan, an increase of 29.47% over the previous year, accounting for 15.15% of operating income, an increase of 1.58 pct over the previous year. In the first quarter of 2023, the company's R&D expenses were 72 million yuan, an increase of 32.31% over the previous year and a decrease of 2.63%. R&D expenses accounted for 14.37% of revenue, an increase of 2.90 pct over the previous year, and a decrease of 5.09 pct over the previous month.

In 2022, Shenzhen Leineng achieved revenue of 674 million yuan, an increase of 24.27% over the previous year, and net profit of 95 million yuan, an increase of 39.96%; Yongli Technology achieved revenue of 249 million yuan, a decrease of 12.69% over the previous year, and net profit of 19 million yuan, a decrease of 43.09% over the previous year. The parent company achieved revenue of 836 million yuan, an increase of 22.12% over the previous year, net profit of 238 million yuan, an increase of 7.36% over the previous year, a net interest rate of 28.50%, a decrease of 3.92 pct over the previous year; the gross profit margin was 62.68%, an increase of 1.04 pct over the previous year.

In 2022, the company lost 40 million yuan in asset impairment and 20 million yuan in credit impairment losses, all higher than in 2020 and 2021. The company's total profit in 2022 was 315 million yuan. If asset and credit impairment losses are simply added back, the total profit in 2022 was 375 million yuan, an increase of 13.14% over the same period last year. 2023Q1 lost $16 million in credit impairment.

We adjusted our profit forecast based on the latest financial reports. The company's net profit for 2023-2025 is estimated to be 4.52/618/811 million yuan respectively, and EPS is 0.84/1.15/1.51 yuan/1.51 yuan/share respectively. Corresponding to the closing price of PE on April 21 was 34.5/25.2/19.2 times, maintaining the “increase in holdings” rating.

Risk warning: Competition in the industry has intensified, the progress of new product development has fallen short of expectations, and the growth of the civilian goods market has fallen short of expectations.