Incident: The company released its 2022 annual report and 2023 quarterly report. In 2022, the company achieved operating income of 308 million yuan, a decrease of 18.76% over the previous year; net profit attributable to shareholders of listed companies was 31.3784 million yuan, a decrease of 37.84% over the previous year. In the first quarter of 2023, the company achieved operating income of 89.222 million yuan, an increase of 27.17% over the same period last year; net profit attributable to shareholders of listed companies was 6.9577 million yuan, an increase of 2725.91% over the same period last year.
The pandemic put pressure on performance in '22, and Q1 performance improved markedly. The company's revenue and profit declined to a certain extent in 2022. The main reasons were: (1) due to the international macroeconomic downturn, the company's production capacity utilization rate in the first half of the year was insufficient, and at the same time, poor supply chain affected the delivery of some of the company's orders, leading to a decline in revenue scale compared to the same period last year; (2) rising raw material prices combined with fluctuations in shipping prices caused the company's gross margin to fall from 34.8% in 2021 to 31.0% in 2022, a decrease of 3.8pct. The 2023Q1 company's revenue, net profit returned to the mother, and net profit after non-return to the mother increased 27.17%, 2725.91%, and 548.88% respectively. As the market environment gradually picked up, the results for the full year 23 are worth looking forward to.
The membrane component business bucked the trend, and domestic substitution opened up room for growth. By product, composite pressure tanks achieved revenue of 116 million yuan in 2022, a decrease of 24.60% from the previous year; reverse osmosis and nanofiltration membranes achieved revenue of 76.2379 million yuan, a decrease of 34.70% from the previous year; reverse osmosis and nanofiltration membrane elements achieved revenue of 585.381 million yuan, an increase of 30.67% over last year, and membrane component pressure vessel revenue was 43.6981 million yuan, a decrease of 12.44% from last year.
Currently, foreign giants account for more than 70% of China's reverse osmosis membrane and nanofiltration membrane market. In the context of the country's construction of internal circulation and a complex international environment, domestic membrane manufacturers represented by the company have helped accelerate the replacement import process in China's membrane industry with customized product development, excellent product performance, and personal one-stop service. At the same time, the company continues to expand product application scenarios to provide a strong guarantee for future business performance.
The first entry card is salt lake to pick lithium, creating a second growth curve. The company has a leading layout in the salt lake field. As a manufacturer of nanofiltration membranes, the main component of the salt lake lithium extraction membrane system, it has independently developed core components such as low-temperature pretreatment nanofiltration membranes, high-salt concentrated membranes, and homemade freshwater equipment suitable for salt lakes in Tibet. According to the company's 2022 annual report, pilot projects for salt lake and ore (clay) membrane lithium extraction provided by the company in Tibet and Qinghai are progressing smoothly; the company is further promoting the application of membrane technology in lithium battery recycling, titanium dioxide and phosphorylation in more scenarios.
Investment advice and valuation: We adjusted the company's profit forecast for 2023-2024 and added the 2025 profit forecast. It is estimated that the company will achieve sales revenue of 572 million yuan, 731 million yuan, and 883 million yuan in 2023-2025. The growth rates will reach 85.8%, 27.7%, and 22.1% respectively. The net profit achieved by the mother was 94 million yuan, 133 million yuan, and 181 million yuan respectively. The growth rates reached 198.5%, 41.9%, and 36.1% respectively to maintain the “increase” investment rating.
Risk warning: the risk that overseas sales revenue is relatively high, the risk that project construction falls short of expectations, the risk of multinational supply of raw materials, etc.