Description of the event

The company released its 2022 annual report, achieving annual revenue of 669 million yuan, a decrease of 47.96%; realized net profit of -98 million yuan, from profit to loss; and realized net profit of -166 million yuan after deducting non-return mother's net profit from profit to loss. The company released its report for the first quarter of 2023. Q1 achieved revenue of 150 million yuan, a decrease of 22.66%; achieved net profit of 11 million yuan, a decrease of 69.04%; and achieved net profit of the non-return mother of 0.04 million yuan, a decrease of 82.24%.

Incident reviews

Macro and other factors influence the company's 2022 results. The company's revenue and performance declined in 2022. The main reasons include: due to factors such as the macro environment, the company's business development, manufacturing, and project delivery were impacted to a certain extent, and the progress of some bidding, delivery and acceptance work was delayed; in addition, the investment pace of downstream customers changed, and the bidding scale for robotic intelligent equipment declined.

Gross margin declined sharply in 2022, and 2023Q1 has improved. Gross margin for the full year of 2022 decreased by 27.14pct to 32.79%, mainly because robot product sales did not meet expectations, while the share of other non-robot businesses with low gross margins increased; the cost rate for the period increased 26.48pct to 55.39%. Among them, sales, management, R&D, and financial expenses rates increased by 6.76pct, 9.47pct, 8.36pct, and 1.89pct to 12.58%, 17.82%, 22.29%, 2.7%, respectively. However, it is important to note that 2023Q1's gross sales margin reached 48.7%, and the net sales margin reached 7.6%, showing a clear trend of improvement over the previous month.

There has been an increase in operating cash flow. The company's net operating cash inflow for the full year of 2022 was 119 million yuan, an increase of 130 million yuan over the previous year. This was mainly due to the discounting of notes received earlier in the reporting period.

The payout ratio increased by 66.29 pct and 2.54 pct to 124.74% and 82.88% respectively.

Continue to deepen the research and development of basic robot platforms and technologies to consolidate and enhance technical strength. Relying on technical strength located in Nanjing, Shenzhen and other places, the company collaborates and drives cutting-edge technology and product development, further develops and constructs basic key components and robot subsystems such as robot algorithm platforms, robot central control systems, positioning and planning control systems, etc., and carries out development and verification of hardware platforms, gradually building a comprehensive standardized platform system for the company's software, hardware, and algorithms to unify the design foundation to improve product development efficiency and product capabilities.

Promote multi-sector and diversified development strategies, and there are plenty of orders on hand. Combining market demand and user experience, the company continues to iterate, optimize and upgrade mass-produced products such as inspection, operation, and fire fighting robots to expand product functions and application scenarios to further enhance product performance and company competitiveness. At the same time, the company has also officially entered the three new market fields of commercial cleaning, new energy charging, and rail transit. At present, it has officially released various new products for commercial cleaning robots, smart shared charging systems, and vehicle inspection robots, and is simultaneously carrying out pilot applications, customer development, market development, and channel construction of products in these new fields, laying the foundation for the company's further development. By the end of 2022, the company had about 420 million contract orders;

In addition, the company's commercial new product business, such as cleaning robots and smart shared charging systems, is awaiting fulfillment of about 237 million framework contract orders.

Profit forecasting and valuation

It is estimated that in 2023-2025, the company's operating income will be 1,188/1661/2113 million, respectively, with a year-on-year growth rate of 77.68%/39.78%/27.20% respectively; the net profit of the mother is 247/430/582 million yuan respectively, and the year-on-year growth rate is 352.39%/73.96%/35.36% respectively. It is expected that the company's difficult situation will reverse in 2023, and new product expansion is also expected to create a second growth curve, giving it an “increase in holdings” rating.

Risk warning

Intelligent investment in power grids fell short of expectations; diversification fell short of expectations; repeated risks of the epidemic