The company released its 2022 annual report on April 24. The total annual revenue for the year was 12.06 billion yuan, an increase of 6.9%; the cumulative net profit returned to the mother was 290 million yuan, a decrease of 41.0%, after deducting non-net profit of 180 million yuan, a decrease of 61.0%, and EPS of 0.25 yuan, a decrease of 47.9%. Considering the company's order acceptance improvement, the EPC transformation was smooth, and the company's holdings growth rating was maintained.

Key points to support ratings

Dragged down by accounts receivable, revenue increased no profit throughout the year: the company's revenue in 2022 was 12.06 billion yuan, an increase of 6.9%, net profit of 290 million yuan, a decrease of 41.0%, a decrease of 180 million yuan of non-net profit, the same decrease of 61.0%, and EPS of 0.25 yuan, a decrease of 47.8%; 2022Q4 achieved revenue of 3.34 billion yuan, an increase of 13.9%; Guimo's net profit - 90 million yuan, a decrease of 178.0%; net profit of -1.0 billion yuan, a decrease of 147.5%. Non-recurring revenue from government subsidies during the year increased the company's profits significantly, but the amount of credit impairment due to poor project repayment was large, which ultimately dragged down profit levels.

Orders and sales of steel structures have steadily increased, and gross profit per ton has increased. In 2022, the company signed a total of 14.61 billion yuan of new contracts for steel structures, an increase of 2.9% over the same period. In 2022, the company's steel structure sales reached 680,000 tons, an increase of 1.7%. During the year, the price of steel structure products increased; the price of steel structure products increased by 15,082.6 yuan, an increase of 13.9%; the cost of tons was 12,813.8 yuan, an increase of 14.0%; and gross profit of tons was 2,268.9 yuan, an increase of 13.2%.

Chemical fiber is being weighed down by costs, and tons of gross profit have turned negative. In 2022, the company's chemical fiber sales reached 384,000 tons, down 20.8% from the same period. The boom was low, the price of raw materials continued to rise, and the profit of chemical fiber products turned negative.

Consolidate the “EPC General Contracting +1 Project” development strategy and drain BIPV applications. In January 2023, the company won the bid for the “Gaochuang World Industrial Park” project in Hangzhou, with a bid price of 1.58 billion yuan. The company continued to increase its brand popularity in the field of prefabricated steel structures and continuously consolidated the “EPC General Contracting +1 Project” development strategy. On the BIPV side, through cooperation with photovoltaic companies such as daycare, Foster, and Hangzhou Longyan, the company has, on the one hand, achieved the drainage of BIPV applications, and on the other hand, explored the development and use of flexible components to meet the needs of special-shaped, old, and underloaded roofs. As the price of modules falls, the distributed photovoltaic business is expected to usher in the release of orders during the year, increasing the company's profits.

valuations

Affected by credit impairment, the company's performance fell short of expectations. Profit forecasts were partially lowered. The company's revenue for 2023-2025 is estimated to be 132.0, 147.0, and 16.22 billion yuan respectively, while net profit attributable to the mother is 57, 6.1, and 680 million yuan respectively; EPS is 0.49, 0.53, and 0.58 yuan respectively. Maintain the company's holdings growth rating.

The main risks faced by ratings

Prices of raw materials have fluctuated greatly, EPC projects have fallen short of expectations, and the recovery in downstream demand has fallen short of expectations.