Event: The company released its 2022 annual report and the first quarter report of 2023. Among them, 2022 achieved revenue of 1.47 billion yuan, YoY +44.65%, net profit attributable to shareholders of 312 million, YoY +145.09%, achieved net profit attributable to shareholders after deduction of 301 million, YoY +149.05%; in the first quarter of 2023, the company achieved revenue of 270 million, YoY -12.56%, and achieved net profit attributable to shareholders of 0.6 million, YoY +32.15%, achieving net profit attributable to shareholders after deduction 60 million, YoY +34.47%;
Gross margin rose, and first-quarter earnings exceeded expectations. The company's net profit for the first quarter was 9.51% higher than the upper limit of the January-March forecast value of 55 million yuan in the company's prospectus. It was mainly influenced by a combination of factors such as improved production management efficiency, rising exchange rates, and falling shipping costs, which caused the company's gross margin for the first quarter to rise compared to the previous period and ultimately achieved net profit exceeding expectations.
Deeply tied to overseas ODMs, the golf cart market is growing rapidly. The company is deeply tied to American golf cart brands ICON and LVTONG USA. With advanced product technology and high cost performance advantages, the company helps ODM customers quickly seize the market while achieving rapid growth in the company's revenue and profit. In 2022, the company's sales revenue from ICON and LVTONG USA reached 67.16%, totaling 988 million yuan, an increase of 55.45% over '21, which is the main driving force for the company's growth.
Expand production capacity to meet market demand and open up room for growth. In order to meet the explosive growth in demand from overseas customers, the company's production capacity rapidly expanded from 16,700 units in 2019 to 42,000 units in 2021 and actually produced 58,300 units in 2022. The company's IPO fundraising plan plans to invest 279 million yuan to continue expanding production capacity, adding a planned production capacity of 17,000 units. At the same time, the company's net IPO capital was 2,101 million yuan, and the overraised reached 1,696 million yuan. The company has sufficient capital for capacity expansion to ease the company's capacity bottlenecks to meet strong demand in the industry.
Continued investment in R&D, new products may lead new growth. The company lays out a variety of field electric vehicles, which are widely used in golf courses, scenic spots, hotels and other scenarios. According to the company's disclosure, the company tested UTV electric all-terrain vehicles in small batches in 2022 and entered the sales stage, which is expected to become a new growth point for the company's revenue. At the same time, the company actively promoted R&D, production and promotion of new products such as C-series golf carts and Euro5 standard DB electric vehicles, continuing to enhance the company's market competitiveness.
Investment advice: We expect Lutong Technology's net profit from 2023-2025 to be 4.47/594/769 million yuan respectively, corresponding to the current valuation of 18.4/13.8/10.7 times, respectively. Considering the continued high growth of the company's overseas ODM customers, it will maintain its “buy” rating.
Risk warning: There is a high risk of dependence on the top two major customers, industry competition intensifies, and raw material prices fluctuate