Event: the company released its annual report of 2022 and quarterly report of 23 years, with revenue of 2.698 billion yuan, an increase of 24.36% over the same period last year, and a net profit of 169 million yuan, an increase of 4.47% over the same period last year. 2023Q1 realized revenue of 427 million yuan, an increase of 10.68% over the same period last year, and a net profit of 33.732 million yuan, an increase of 18.10% over the same period last year.

Comment

The company's revenue has grown rapidly in the past 22 years, and the impairment has led to the poor performance of the company. 2022Q4 revenue / return net profit was 1.081 billion / 73 million yuan respectively, an increase of 3.57% over the same period last year.

The gross profit margin / net profit margin for the whole year was 20.72% / 6.61% respectively, a decrease of 0.69pct/0.99pct compared with the same period last year. The annual sales / management / R & D / financial expense rate of the company reached 0.95%, 6.07%, 4.23%, 0.66%, respectively, an increase of 0.14pct/-0.49pct/0.48pct/-0.15pct over the same period last year. During the reporting period, the net operating cash flow was 132 million yuan, a decrease of 49.41% over the same period last year, mainly due to the increase in cash paid by the business in the current period. For the whole year, the credit impairment loss / asset impairment loss reached 3608.06 million yuan, an increase of 103.83% and 40.62% over the same period last year, resulting in the poor performance of the company.

The company's business structure continues to be optimized, and the proportion of project contracting continues to decrease. In 2022, the company's revenue from mechanical and electrical engineering system delivery / equipment manufacturing / design consulting / project contracting reached 10.92 million yuan respectively in 2022, with a year-on-year growth rate of 23.75%, 100.45%, 12.82% and 27.43%, respectively. Equipment manufacturing has achieved rapid growth, the proportion of project contracts with low gross profit margin continues to decrease, and the company's profitability continues to improve.

The number of newly signed orders has increased rapidly in the past 22 years, and the performance growth is expected in the later period. In 2022, the newly signed contract value of the company was 3.944 billion yuan, an increase of 39.59%. In terms of product categories, the newly signed contract value of mechanical and electrical engineering system delivery business is 2.154 billion yuan, accounting for 54.63% of the total newly signed contract, an increase of 93.76%; the newly signed design consulting business contract value is 818 million yuan, an increase of 9.29%; and the newly signed equipment manufacturing contract value is 636 million yuan, an increase of 1.67%. From the perspective of the industry, the newly signed contracts in the grain and oil processing industry totaled 3.173 billion yuan, accounting for 80.47 percent of the total contracts signed, an increase of 808 million yuan, or 34.17 percent, over the same period last year; and the newly signed contracts in the cold chain logistics industry totaled 751 million yuan, accounting for 19.05 percent of the total contracts signed, an increase of 301 million yuan over the same period last year, an increase of 66.76 percent. The continuous promulgation of cold chain logistics industry policy is expected to lead to the continuous improvement of the company's orders and follow-up revenue.

Maintain the company's "overweight" rating and adjust the profit forecast according to the annual report. It is estimated that the company's net profit from 2023 to 2025 will reach 2.80,3.67 and 474 million yuan respectively, an increase of 66%, 31% and 29% over the same period last year, with a corresponding valuation of 25, 19 and 15 times.

Risk hint: downstream demand is lower than expected, valuation and profit forecast are not as expected.