Record high performance: Sanlian Hongpu released its 2022 annual report and 2023Q1 quarterly report. Among them, 2022 achieved revenue of 1,060 million yuan, +26.12% year on year, and net profit of the mother was 240 million yuan, +26.12% year on year. 2023Q1 achieved operating income of 297 million yuan, +38.37% year on year, and net profit returned to the mother of 68 million yuan, 15.01% year on year. Annual and quarterly net profit reached record highs.

Orders continue to grow: The growth in company orders is reflected in an increase in contract debt. The company's contract debt at the end of 2022 was 717 million yuan, up 68.31% from 426 million yuan at the beginning of 2022. The increase in contract debt was mainly due to an increase in contract advance payments. In 2022, the company signed and announced orders totaling 1.42 billion yuan with companies such as Taihua New Materials and Polymerization, which also reached a new high.

Industrial AI starts sales of chemical fiber intelligence: the company officially started sales of “Chemical Fiber Industry Smart Solution” products in the chemical fiber industry. Affected positively by market development of new solutions, the company's industrial AI integrated application solutions business achieved revenue of about 79.549,800 yuan in 2022, an increase of 58.70% over the same period last year. With the rapid expansion of the scale of leading chemical fiber enterprises, higher requirements have been placed on the operation and management of enterprises, and the application of intelligent manufacturing in the industry is gradually showing results. In recent years, key chemical fiber enterprises are gradually building digital platforms for master data, real-time data, applications, logo analysis, and management information systems. Business intelligence is integrated and inherited, and there is a strong desire to increase investment in intelligent equipment, showing an urgent need to improve management capabilities. Relying on core competencies such as industry expertise and process mechanism principles, the company is gradually packaging the process into an industry-oriented microservice industry app. Together with the intelligent robots and intelligent logistics solutions provided by the company, a closed-loop control system directly connected to the core production machine system and autonomous collaboration between equipment is formed. The company utilizes a “one-stop” overall handover model covering the entire production value chain of the enterprise, organically combining intelligent product launch with the project process. From the beginning of the new project, the company unified planning, design, integration, debugging and installation, bringing better application results to customers and achieving rapid efficiency growth.

Combining the company's order signing situation and profit margin in '22, we lowered revenue and gross profit margins, and also lowered the three expense ratios. We predicted that the company's net profit to the mother for 2023-2025 would be 302, 380, and 434 million yuan respectively (the original forecast was 318, 424, and -100 million yuan). Comparable with the company's average PE for 23 years, the corresponding target price was 18.05 yuan, maintaining the purchase rating.

Risk warning

Product demand is falling; product prices are falling; the progress of new projects falls short of expectations.