In 2022, the company achieved operating income of 4,868 million yuan (+19.1%), net profit of 302 million yuan (+107.0%), net profit of 283 million yuan (+112.0%) after deducting non-homo net profit; 2023Q1 achieved operating income of 1,327 million yuan (+28.0%), net profit of 53 million yuan (+61.5%), and net profit of 48 million yuan (+67.9%) after deducting non-homo net profit, in line with expectations. Considering the company's leading position in the photovoltaic module equipment field and the expected gradual release of battery equipment products from various routes, we are optimistic about the company's long-term development prospects and maintain the company's 2023/24 net profit forecast of 45/570 million yuan, adding 690 million yuan to Fumo's net profit forecast for 2025.

In 2022, the company's photovoltaic equipment business developed rapidly, and the net profit of cost reduction and fee control was doubled. In 2022, the company achieved operating income of 4,868 million yuan (+19.1%), net profit of 302 million yuan (+107.0%), and net profit of 283 million yuan (+112.0%) after deducting non-return to the mother. 1) Business side: The photovoltaic equipment business is the core driving force for the company's high performance growth. It achieved revenue of 3.26 billion yuan (+46.4%) in 2022, and the business share increased to 67.0% (+12.5 pcts); the packaging equipment business achieved revenue of 682 million yuan (-27.4%), and gross margin was 22.9% (+3.0pcts). The improvement in gross margin level was mainly due to an increase in the share of high-margin overseas business. 2) Expense side: The cost rate for the company period in 2022 was 13.1% (-1.5pcts), of which the sales, management, R&D and finance rates were 3.3% (-0.2pct), 4.9% (-0.3pct), 5.5% (+0.7pct), and -0.6% (-1.8pcts), respectively. The contraction in the financial expenses ratio led to a slight decline in the overall rate. 3) Profitability: In 2022, the company's gross sales margin was 21.5% (+1.8%), and the net sales margin was 6.2% (+2.6pcts). Net profit margin improved markedly year-on-year, mainly due to the increase in the company's gross sales margin and improvements on the cost side.

2023Q1's revenue continued to grow, and profitability increased year-on-year. 2023Q1 achieved operating income of 1,327 million yuan (+28.0%), net profit of 0.3 million yuan (+61.5%), net profit of 48 million yuan (+67.9%), net profit of 19.6% (+2.6pcts), net interest rate of 4.0% (+0.8pct); the cost rate for the period was 14.1% (+1.0pcts), with sales, management, R&D and financial rates of 3.2% (+0.6pct), 5.1% (+), 5.1% (+) 0.4 pct) and 0.7% (flat), and the various fee rates remained stable.

The photovoltaic equipment business orders are sufficient, and the layout of multi-line battery equipment is perfect. The photovoltaic equipment business is the company's core business, accounting for nearly 70% of revenue. The main products include module equipment and battery equipment. 1) Module equipment business: In 2022, the company continued to expand overseas markets, providing overall solutions for new module production lines and related equipment for North American photovoltaic module manufacturer Heliene. 2) Battery equipment business: The company comprehensively lays out the three new high-efficiency battery routes of perovskite, HJT and TopCon. Currently, the company has the ability to provide MW grade perovskite overall solutions and GW grade perovskite mass production equipment output and technical support; the company has successfully delivered the first HJT cleaning and velvet making equipment and passed customer verification, and obtained orders for 4GW cleaning and velvet making equipment at the end of 2022; the company can provide PECVD & PVD coating equipment for TopCon batteries, velvet making and cleaning process equipment, etc., and the first TopCon Technology's 2-in-1 coating equipment has been successfully delivered. As of December 31, 2022, the company's photovoltaic equipment business had on-hand orders of 5.444 billion yuan (tax included), an increase of 45.6% over the previous year.

Risk factors: macroeconomic fluctuations; exchange rate fluctuations; fluctuations in raw material prices; uncertainty about the PV battery technology route; demand for module equipment falls short of expectations; development progress of battery equipment falls short of expectations; market competition intensifies; capacity expansion falls short of expectations.

Investment advice: Considering the company's leading position in the field of photovoltaic module equipment and the expected gradual release of battery equipment products from various routes, we are optimistic about the company's long-term development prospects and maintain the company's 2023/24 net profit forecast of 45/570 million yuan, adding 690 million yuan to Fumo's net profit forecast for 2025.