Incidents: In 2022, the company achieved revenue of 2.96 billion yuan, an increase of 9.1% over the previous year; achieved net profit of 250 million yuan, a year-on-year decrease of 11.6%; after deducting net profit of non-homo mother, 230 million yuan, a year-on-year decrease of 9.4%. Among them, the company achieved revenue of 840 million yuan in the fourth quarter, an increase of 17.7% over the previous year; it achieved net profit of 90 million yuan to the mother, an increase of 14.8% over the previous year. 2023Q1 achieved revenue of 650 million yuan, a year-on-year decrease of 3.9%; Guimu's net profit was 0.3 million yuan, down 17% from the previous year.
Gross margin has been rising steadily, and the cost side is under pressure in the short term. The company's gross margin in 2022 was 38.2%, an increase of 0.5pp over the previous year, and further increased to 38.6% in 2023Q1. The company's gross margin is expected to increase steadily: ① the proportion of the company's higher-value products (hollow cup 2k yuan > servo 1k yuan > brushless 30 US dollars > step 10 US dollars) will gradually increase; ② automation equipment for new production lines in Taicang helps reduce costs and scale effects after production capacity is released; ③ the company will develop from selling single motors to drive controllers with higher added value. Expense side: The company's sales/management/finance expenses ratio in 2022 was 8.3%/20%/-0.3%, respectively, compared to -0.5pp/+2.5pp/-1pp, respectively. The sharp increase in management expenses was mainly due to expenses such as epidemic prevention expenses and personnel recruitment. It is expected that the cost side will be diluted downward in 2023.
The deployment of emerging industries is accelerating, and demand from traditional industries is expected to recover. In 2022, the company's control motor and drive system segment achieved revenue of 2.32 billion yuan, an increase of 10.6% over the previous year, and gross margin was 40.6%, an increase of 1.2 pp over the previous year.
In downstream emerging industries, industrial automation revenue increased by 32%, medical equipment increased 27% (including drive control increased by 39%), photovoltaic/lithium battery/semiconductors increased 17%, and smart cars increased 20%. Further increases are expected in the future. Furthermore, the company's traditional fields such as textiles and security are expected to rise as downstream demand recovers.
High-end hollow cups have deep barriers, and orders for Tesla humanoid robots are expected to land, opening up space for imagination. High-end hollow cup motors are mainly used in industrial control, medical care, aerospace, semiconductors, etc. After a long cycle and high capital upfront investment, the company is now deeply tied to domestic and foreign giants. The hollow cup motors are in the first echelon in the world, benchmarking overseas giants such as Maxon. The company sent a sample hollow cup motor to the core finger joint of the Tesla humanoid robot. While it is reliable, it has a cost advantage over foreign investment. According to estimates, the current value of the hollow cup motor in one humanoid robot is about 1.2w yuan, accounting for about 8%. Taking into account the technical strength and reputation of the company's products, we think that orders for this project are likely to be fulfilled, and the company is expected to bring high performance flexibility as Tesla customers start.
Profit forecasts and investment recommendations. The company's revenue is estimated to be 4.11 billion yuan, 5.82 billion yuan and 6.69 billion yuan respectively from 2023 to 2025. The company's plant moved to Taicang and production capacity was further expanded, providing sufficient guarantees for performance growth. Furthermore, it is expected that the company's expense ratio will improve from 2023Q2, with a gradual increase in gross margin, driving net interest rate back up. The company's net profit growth rate is expected to be 63.2%/76.4%/16% respectively in the next three years, maintaining the “holding” rating.
Risk warning: the risk that overseas procurement costs and exchange losses will increase due to a rise in the RMB exchange rate; the risk that demand from downstream emerging industries falls short of expectations; the risk that the recovery of downstream traditional industries falls short of expectations; the risk that raw material prices will rise.