The company released its annual report for 2022, achieving revenue of 1,731 million yuan in 2022, +72.53% year on year, net profit of 226 million yuan, +110.30% year on year; the company's 2023Q1 revenue was 296 million yuan, and net profit of 38 million yuan. The company is a leading enterprise in the field of easy pull cap and tank production equipment. It was initially engaged in the production of high-speed press equipment for easy pull lids. It was a pioneer in domestic production equipment manufacturing. The company's new energy battery case business was put into operation in 2020, and the DWI process for cans was introduced into battery case production, which is expected to improve efficiency and reduce costs.

With the gradual mass production of 4680 large cylindrical batteries and the gradual introduction of the company's production capacity, the company is expected to start a second growth curve. Continue recommending and maintain the “buy” rating.

Matters: 1) The company released its 2022 annual report on April 26:2022 achieved revenue of 1,731 million yuan, +72.53% year on year, net profit of 226 million yuan to the mother, +110.30% year on year, after deducting non-net profit of 221 million yuan, +112.68% year on year. 2) The company released a report for the first quarter of 2023, achieving revenue of 296 million yuan in the first quarter of 2023, +1.22% year on year, net profit of 38 million yuan, -13.65% year on year; after deducting non-net profit of 33 million yuan, -19.17% year on year. The comments on this are as follows:

Results in 2022 were impressive, with both revenue and profit growing. The company achieved revenue of 1,731 million yuan in 2022, +72.53% year on year, net profit of 226 million yuan, +110.30% year on year, after deducting non-net profit of 221 million yuan, +112.68% year on year. The company's special equipment manufacturing segment achieved revenue of 1,393 million yuan, +64.95% year on year; the battery case business segment achieved revenue of 245 million yuan, +212.20% year on year. Among them, the increase in profit was due to a sharp increase in the company's operating income during the reporting period. The company achieved both overall revenue and net profit growth and achieved the best results since its establishment. The 2023Q1 company deducted non-net interest rate of 11.1%, a decrease of 2.9 pct over the previous year and an increase of 3.4 pct over the previous month.

There is room for growth in can equipment, and the company's main business has grown dramatically. The recovery of the global epidemic, increased demand for soft drinks and canned beer, and the “plastic restriction order” will drive the growth of the metal packaging industry. The canning equipment industry is highly concentrated, and the key barrier in the canning field lies in the production equipment process, which tests equipment manufacturing technology and system integration capabilities. The company's revenue from the high-speed production equipment and system transformation business of cans increased 129% year-on-year in 2022, with a gross margin of 38.22%; revenue from the high-speed production equipment and system transformation business of easy pull caps increased 14%, with a gross margin of 40.44%.

Battery case business: The market is highly concentrated+large cylindrical volume. The company's 46 series large cylindrical steel case has been produced in small batches. In the context of the accelerated penetration of new energy vehicles around the world and the explosive growth of energy storage installations, 4680, blade batteries, and Kirin batteries have placed higher requirements on the case. The company applied the DWI process of producing cans to battery cases, which is expected to improve efficiency. The company accelerated the construction and layout of production capacity for new energy battery cases in 2022, and successfully obtained a controlling interest in Changzhou Hesheng; on the other hand, it accelerated the R&D and manufacturing process of the other case and the 46 series large cylindrical steel case production line. The company's 46 series large cylindrical steel shell production line has completed the manufacturing of main equipment and an automated high-speed production line. Currently, small-batch production is being carried out. In the future, large-scale formal mass production will begin according to customer needs.

The core technical advantages are outstanding, helping battery cases develop their advantages collaboratively. The production technology of the company's complete equipment for rolling lids and cans is mature. It has significant technical advantages in the high-speed stamping of the six-channel easy pull system, the high-speed thinning and stretching of the two-way double-stroke stretching machine, and the personalization of digital can printing products. The company gave full play to the advantages of business collaboration and developed a high-speed automated battery case production line based on targeted research and development based on the characteristics of new energy batteries themselves.

Risk factors: The risk that the development of new energy vehicles falls short of expectations, the risk of the company's DWI technology falling short of expectations, the risk of a sharp decline in demand for can/lid equipment, the risk of increased competition in the industry, and the risk of fluctuations in raw material prices; the release of production capacity falls short of expectations.

Investment advice: The company relies on accumulation in the field of can equipment to transform battery case manufacturing. With the gradual mass production of 4,680 large cylindrical batteries and the gradual introduction of the company's production capacity, it is expected to start a second growth curve. We maintain the company's 2023/2024 net profit forecast of 35/580 million yuan respectively, and increase the 2025 revenue and net profit forecasts to 62.8/670 million yuan respectively. Combining the average PE valuation of comparable companies (Kodaly, Zhenyu Technology, Pioneer Intelligence) in 2023 (20 times, Wind Wind's consistent expectations), and considering that the company's DWI's new technology is expected to receive a certain valuation premium, giving 35 times PE in 2023, with a target market value of 12.3 billion yuan, corresponding to the target price of 20 yuan, and continuing to recommend and maintain “buying” ” Ratings.