Incident: The company released its 2022 annual report and the first quarterly report of 2023. 1) In 2022, the company achieved operating income of 944 million yuan, an increase of 25.66%; net profit attributable to shareholders of listed companies was 90 million yuan, a decrease of 17.85% over the previous year; net profit returned to the mother after deduction was 80 million yuan, a decrease of 19.79% over the previous year. 2) 2023Q1 achieved operating income of 276 million yuan, an increase of 44.38% over the previous year; net profit attributable to shareholders of listed companies was 21 million yuan, an increase of 8.47% over the previous year; net profit returned to the parent after deduction was 119 million yuan, a decrease of 2.68% over the previous year.
Actively expand the product line, and the growth rate of PLC and machine tools is fast. The company achieved revenue of 944 million yuan in 2022, an increase of 25.66% over the previous year. The company's sales of all types of products have achieved positive growth. Among them, servo systems are still the company's main products, while PLC and machine tool products are growing at a faster rate. The company's servo system products achieved sales revenue of 758 million yuan, an increase of 14.98% over the previous year, accounting for 80.3% of sales. The company's PLC-related products achieved sales revenue of 121 million yuan, an increase of 203.71% over the previous year; machine tool products achieved sales revenue of 24 million yuan, an increase of 127.39% over the previous year. The company actively broadened its product line, laid out various types of products and achieved results in the fields of industrial automation and machine tools.
The new energy business is growing rapidly, and gross margins are under pressure. The company's gross profit margin for the full year of 2022 was 30.44%, -6.03pct year on year; net profit margin of return to the mother was 9.57%, -5.07pct year on year; net profit margin after deducting non-return to the mother was 8.43%, -4.77pct year on year; the expense ratio for the period was 22.02%, -2.20pct year on year. The company's gross profit margin for 2023Q1 was 28.99%, -3.28pct year on year; net profit margin of return to the mother was 7.80%, -2.58pct year on year; net profit margin after deducting non-return to the mother was 6.79%, -3.27pct year on year; the expense ratio for the period was 21.32%, -1.85pct year on year. The company's overall profit index declined, mainly due to the company's reduction in overall product sales prices in emerging industries such as photovoltaics and lithium batteries in order to expand its market share, which led to phased pressure on gross margin.
The company issued a plan for convertible bonds and actively laid out new categories. The company issued the “Plan for Issuance of Convertible Corporate Bonds to Unspecified Targets”, which plans to raise no more than 750 million yuan to build R&D and industrialization projects for efficient industrial transmission systems and precision transmission components, R&D and industrialization projects for micro photovoltaic (energy storage) inverters, and supplementary working capital. The company actively lays out new categories based on the original technology base and customers, which is expected to establish a long-term second growth curve.
Profit forecast and investment advice: We expect the company's revenue to be 14.27/19.79/2,576 billion yuan in 2023-2025, +51.15%/38.67%/30.14%; the net profit of the mother is 1.53/2.26/304 million yuan, +69.20%/47.86%/34.61%; EPS is 1.01/1.50/2.02 yuan respectively, and the corresponding PE is 33/23/17 times, respectively. First coverage, giving a “buy” rating.
Risk warning: risk of new product and technology development; risk of macroeconomic fluctuations; risk of fluctuations in raw material prices