Key topics of sub-qualifications:
Q1 revenue increased year-on-year, reaching a record high in the off-season: the company achieved revenue of 190 million yuan in 2022, same as -22%, net profit of 57 million yuan, same as -43%, net profit of 39 million yuan after deducting non-return mother net profit of 39 million yuan, same as -59%. Among them, Q4 achieved revenue of 96 million yuan, the same as -36%, net profit of 30 million yuan, the same as -6%, and net profit of 25 million yuan after deducting net profit of non-return to the mother, the same as -64%. Mainly because power grid project acceptance and revenue recognition are generally concentrated in Q4, and on-site installation is required, influenced by objective factors, tendering and project installation confirmation all lagged behind to varying degrees, and revenue confirmation fell short of expectations. 23Q1 achieved revenue of 37 million yuan, +22%, the highest Q1 revenue since 2020, and achieved net profit of 13 million yuan to the mother, the same +20%, after deducting net profit of 12 million yuan from the non-return mother, +9%.
Substantial progress has been made in expansion outside the province, not in exchange for price: in 2022, the company's revenue from Zhejiang accounted for 75% (same -1 pct), and its business scope covered markets outside the province such as Beijing/Shanghai/Su/Anhui/He/Ji/Lu/Chuan/Xin/Guangdong/Xiang/Tibet.
The company set up a special South Network office, equipped with a professional marketing/technology/service team. The revenue in South China in '22 was +43% compared to the previous year, accounting for 8% (same +4pct), and the gross profit margin was 80% (same +3pct), which also confirmed that the company's expansion outside the province relied on R&D technology and brand advantages rather than price in exchange for volume.
Build industrial and commercial energy storage systems and operation and maintenance platforms to expand new growth space: In 2022, the company independently developed and launched high-power density electrochemical energy storage systems and energy storage safety protection platforms, achieving revenue of 23 million yuan (gross profit margin 19%). The company's advantages in the field of energy storage come not only from the channel/location advantages brought by deep cultivation in Zhejiang, but also from the company's full-link, full-voltage level IoT and big data technology in the field of smart grids, as well as rich experience in integrating electrical and mechanical systems. The company is developing a distributed energy storage management operation and maintenance platform. It is not just an equipment provider. It will combine the company's IoT IoT platform technology and AI intelligent technology to provide customers with comprehensive solutions for investment, operation, and management of green and clean energy assets based on a full understanding of power management.
R&D investment consolidates technological advantages, and technical services enhance the competitiveness of equipment products: in 2022, the company invested 28 million yuan in R&D, accounting for 15% of revenue. 10 new patents were added, and 117 patents are under review.
The company has more than ten years of software development experience and is a strategic development partner for the State Grid Integrated Cloud Platform and one of the power blockchain public service capacity building service providers. The company has mastered digital twin+intelligent AI interactive diagnosis and fault warning technology for electrical equipment, has accumulated a large number of cases and application experience, and enhances the horizontal competitive advantage of equipment products through software services.
Profit forecast: We expect the company to achieve net profit of 1.4/23/290 million yuan in 2023-2025 (new in 2025), corresponding to the current market capitalization PE of 21/13/10 times, maintaining the “buy” rating.
Risk warning: The growth rate of power grid investment falls short of expectations, and energy storage demand falls short of expectations.