Affected by revenue recognition adjustments, the 2022 performance growth fell short of expectations when the company released its 2022 annual report, achieving revenue of 1,143 million yuan, an increase of 50.77% over the previous year; the net profit of Fumo was 74 million yuan, an increase of 20.90% over the previous year; after deducting net profit of 26 million yuan, a decrease of 16.60% over the previous year. The company's revenue for 2022 and net profit after deducting non-return to the parent decreased by 180 million and 0.3 million respectively from the January 2023 performance forecast, both falling short of expectations. The main reason is that due to prudent considerations about confirming revenue from new customers and new business formats in the company's power exchange business, the sales revenue of some of the company's power exchange business in 2022 is expected to be adjusted to be confirmed in 2023, and the company's normal production and operation activities have no impact. Based on the above reasons, we raised the company's 2023 performance forecast, maintained the 2024 performance forecast, and added the 2025 performance forecast. The company's net profit for 2023-2025 is estimated to be 3.18 (+0.52) /442/603 million yuan respectively, and the corresponding EPS for 2023-2025 was adjusted to 2.55 (+0.42) /3.54/4.83 yuan/share, respectively. The current stock price corresponds to PE for 2023-2025 by 19.6/14.1/10.3 times, respectively. Businesses are all in a period of rapid development and maintain a “buy” rating.

Rapid expansion combined with seasonal effects, 2023Q1 losses increased year-on-year in 2023Q1. The company achieved revenue of 182 million yuan, an increase of 83.54% over the previous year; net profit of returned to the mother - 43 million yuan, a decrease of 2798.80% over the previous year; net profit after deducting non-return to the mother - 42 million yuan, a decrease of 212.17% over the previous year; since the company's business was in a period of rapid growth, fixed cost investment was large, and the business scale effect was not reflected. As a result, 2023Q1 net profit loss of deducted non-homing increased year-on-year. Additionally, 2023Q1 performance was also affected by these revenue recognition adjustments.

Focusing on the “1+3+X” strategic combination, the long-term high growth logic determines that the company adheres to the main channel of automobile electrification and intelligence, has formed the “automobile+battery+charging/switching” three-pillar business, and is exploring “X”, the standard product business. Power exchange equipment has been introduced to key customers such as Ningde Era, GCL Energy Technology, Sunshine Mingdao, Blue Valley Intelligence, Jieneng Smart, Yuexiang Xiongan, Shudao Group, etc., and is expected to become the company's growth engine; automotive equipment has accelerated its international layout and standardization process, and its stickiness with global Tier 1 customers such as Tyco, Mainland, and Anbofu continues to increase, and gross margin is expected to continue to increase; battery equipment benefits from energy transformation and dual carbon strategies, and is progressing smoothly with Shenzhen Exxon, Zhengwei Group, Panasonic, BYD and other customers. The company focuses on the “1+3+X” strategic combination, and the long-term high growth logic is determined.

Risk warning: sales of power exchange models fell short of expectations; competition in the equipment market intensified; downstream demand fell short of expectations.