The company released its 2022 annual report and the first quarterly report of 2023. The performance was in line with expectations. In 2022, the company achieved revenue of 2,452 million yuan, an increase of 6.83% over the previous year, and achieved net profit of 144 million yuan to the mother, down 4.23% from the previous year. Among them, elevator business revenue was 2,178 million yuan, down 4.54% year on year, and new energy business revenue was 206 million yuan. Overall, throughout 2022, in the face of a complex and changing market environment, the company actively adjusted the pace of procurement and preparation to cope with the risk of major customer discontinuation and price fluctuations in the raw materials market, and achieved stable and orderly operation of the elevator parts business. In Q1 2023, the company achieved revenue of 410 million yuan, down 9.98% from the previous year, and achieved net profit of 17 million yuan to the mother, down 25.11% from the previous year. The decline in net profit in the first quarter was faster than revenue, mainly due to the increase in management expenses due to the increase in equity incentive expenses.
Gross margin remained stable, and equity incentive expenses led to a slight increase in the Q1 management expense ratio. The company's gross margin of sales and net sales margin in 2022 were 15.78% and 5.38% respectively, with year-on-year changes of 1.42pct and -1.18pct. The gross margin and net profit margin for Q1 2023 reached 15.28% and 2.15% respectively. Gross margin increased slightly from the same period last year. Overall, the company's gross margin remained stable. In terms of the cost rate for the period, the company's sales expense ratio, management expense ratio and R&D expense ratio in Q1 2023 were 0.81%, 9.79%, and 3.02% respectively. Compared with the changes of -1.27pct, 6.81 pct, and -0.33pct in the same period last year, the increase in management expenses was clearly mainly due to the increase in Q1 equity incentive expenses after the acquisition of Tianqi Hongyuan. Overall, excluding the impact of equity incentive expenses, the company's expenses rate remained stable during the period.
Entering the new energy circuit, the subsidiary Tianqi Hongyuan has obvious technical advantages. In May 2022, the company acquired 51% of Tianqi Hongyuan's shares and officially entered the new energy business. Tianqi Hongyuan's main business is divided into energy storage system integration and new energy power plant development. Its core management team has more than 10 years of experience in the fields of renewable energy and energy storage, and has completed many benchmark projects in the fields of wind power, photovoltaics, energy storage and microgrids. Currently, the scale of the energy storage projects that the Tianqi Hongyuan team has participated in the construction of has exceeded 1.5 GWh. On the technical side, the subsidiary Tianqi Hongyuan completely masters 3S (BMS, PCS, EMS) technology, and developed the industry-unique Tianqi AI intelligent module based on this to form an intelligent energy storage solution using “3S technology+AI intelligent module+balance technology”. By using Tianqi Hongyuan's intelligent string scheme, it is possible to increase the overall cycle life of the energy storage power plant to more than 80% of the nominal cycle life of the battery cell, and at the same time reduce the number of battery replacements and power plant maintenance costs after use. It is estimated that the electricity cost of the energy storage power plant will be reduced by 6 to 10%. In the future, energy storage power plants will place higher demands on the fine management of batteries, and Tianqi Hongyuan has a first-mover advantage in energy storage system integration technology.
Investment advice: Considering that equity incentive expenses will disrupt the company's net profit in the next two years, we expect the company to achieve revenue of 51.25/94.33/10.465 billion yuan in 2023-2025 and achieve net profit of 230/6.58/769 million yuan. The current stock price corresponding to PE is 23.7/8.3/7.1x, maintaining the “buy” rating.
Risk warning: rising raw material prices, macroeconomic downturn, project progress falling short of expectations