Key points of investment

Gold Mantis released its 2022 Annual Report & 2023 Quarterly Report: The company achieved revenue of 21.813 billion yuan in 2022, a decrease of 14.03% over the previous year; achieved net profit of 1,273 billion yuan, an increase of 125.71% over the previous year; and achieved net profit of Fumo of 1,014 million yuan after deduction, an increase of 120.37% over the previous year. The company achieved operating income of 5.093 billion yuan in 2023Q1, a year-on-year decrease of 12.87%; realized net profit of 273 million yuan, a decrease of 45.23% over the previous year; and achieved net profit of 217 million yuan after deduction, a year-on-year decrease of 38.50%.

The company achieved revenue of 21.83 billion yuan in 2022, a year-on-year decrease of 14.03%, mainly affected by COVID-19 infection and delays in the construction progress of some projects. The decline in revenue from the core business decoration is, on the one hand, the company's firm transformation into public decoration and the continuous contraction of the residential business; on the other hand, under the influence of COVID-19, the progress of public decoration projects such as hotels has been affected, leading to a slowdown in revenue growth.

The company achieved a comprehensive gross profit margin of 15.78% in 2022, a year-on-year decrease of 0.36pct; achieved a net profit margin of 5.97%, an increase of 25.19pct over the previous year. There was a slight decline in gross margin, mainly due to the impact of COVID-19 infection; the sharp increase in net interest rates was mainly due to the debt problems of some private property companies in 2021 and the calculation of large amounts of depreciation.

The company's asset+credit impairment loss in 2022 was 301 million yuan, accounting for 1.38% of the revenue side, a decrease of 28.94 pct over the previous year. This was mainly due to the debt problems of some private property companies in 2021 and the calculation of large amounts of impairment. The company's net operating cash flow per share in 2022 was 0.11 yuan, a decrease of 0.19 yuan over the previous year. This was mainly due to the impact of COVID-19 infection at the end of 2022 and delays in repayment of some projects.

Profit forecast and rating: We adjusted our profit forecast for the company. We expect the company's EPS for 2023-2025 to be 0.53 yuan, 0.59 yuan, and 0.66 yuan respectively. The closing price corresponding to the closing price on April 28 is 10.1 times, 9.1 times, and 8.2 times, respectively. Maintain an “increase in holdings” rating.

Risk warning: macroeconomic downturn risks, new orders falling short of expectations, order landing falling short of expectations, home improvement business falling short of expectations, worsening cash flow situation, and loss of bad debts exceeding expectations