Event: The company released its 2022 annual report and 2023 quarterly report. In 2022, the company achieved revenue of 1,714 million yuan, +15.96% year on year, and achieved net profit of 283 million yuan to the mother, +3.29% year on year. In the first quarter of 2023, the company achieved operating income of 497 million yuan, +5.59% year on year, and achieved net profit of 114 million yuan to the mother, +31.01% year on year.
Special power supply revenue has been growing steadily, and gross margin has increased significantly. By industry: The growth rate of the communications sector is slightly faster than that of the special sector, and the gross margin of the special sector has increased significantly. The special sector achieved revenue of 998 million yuan, +13.51% year on year, and gross margin was 63.89%, +2.98 pct year on year. The communications sector achieved revenue of 651 million yuan, +19.85% year on year, gross margin of 24.80%, and -1.95pct year on year. By product, the revenue growth rate of customized power supplies, high-power power power supplies and systems was relatively fast, and revenue from module power supplies declined. Module power supplies achieved revenue of 700 million yuan, -12.38% year on year, gross profit margin of 60.26%, and +5.85 pct year on year. Customized power supplies achieved revenue of 452 million yuan, +73.06% year on year, gross profit margin of 56.13%, and -2.79pct year on year. High-power power power supplies and systems achieved revenue of 448 million yuan, +33.31% year on year, gross profit margin of 21.29%, and -4.75pct year on year. By region, domestic business achieved revenue of 1,303 billion yuan, +18.72% year on year, gross profit margin 53.61%, +0.06pct year on year; foreign revenue reached 411 million yuan, +7.97% year on year, gross profit margin 29.37%, and +0.20pct year on year.
R&D expenses continued to grow rapidly in 2022, and net interest rates declined slightly. In 2022, the corporate period fee rate was 26.35%, +2.01pct compared to the previous year. Among them, the sales/management/R&D/financial expenses ratio was -0.23pct/+0.59pct/+1.58pct/+0.07pct, respectively. The company's R&D expenses were 260 million yuan, +29.47% over the same period last year. The company continues to increase investment in R&D of modular power supplies, customized power supplies, high-power power power supplies and systems, and has carried out research and development of a number of highly reliable localized products and server power supplies. At the end of 2022, the number of R&D personnel in the company was 1,030, +41.10% over the same period last year. In 2022, the company's overall net interest rate was 16.98%, -2.86pct compared to the previous year. It was mainly affected by the sharp increase in the company's management expenses and R&D expenses, as well as the calculation of more asset impairment losses and credit impairment losses.
A marked increase in inventory may indicate strong downstream demand. The company's inventory at the end of 2022 was 973 million yuan, +31.61% year on year. Or it indicates that downstream demand is strong, and the company is actively preparing goods for production. By the end of 2022, the implementation progress of the Yongli Science Park and Shenzhen Sigma Power Production and R&D Base projects built using free capital reached 100% and 18.51%, respectively. The implementation progress of the company's special power supply expansion project, the high-reliability SiP power microsystem product industrialization project, and the 5G communication and server power supply expansion project was 16.97%/14.92%/32.77% respectively. Following the release of production capacity, the company's performance is expected to reach a new level.
Investment advice: The company's products are mainly aimed at the aerospace and communications sector. During the 14th Five-Year Plan period, the aerospace equipment industry maintained a high level of prosperity, and the increase in the level of equipment electrification led to an increase in demand for power supply products; in the field of 5G communication, the scale of 5G base station construction continued to expand, and demand for power products was strong. The company has strong technical strength, stable product quality, high reliability and high localization rate to meet the strict requirements of downstream customers. New customers and orders are constantly increasing. We forecast the company's net profit from 2023 to 2025 of 412 million yuan, 568 million yuan and 756 million yuan respectively, and the corresponding PE will be 28.7, 20.8 million and 15.6 respectively. Maintain an “increase in holdings” rating.
Risk warning: The pace of delivery of aerospace equipment is slowing down, and the construction progress of 5G base stations falls short of expectations.