[Investment points]

The company's performance grew steadily throughout 2022, and continued the growth trend in the first quarter of 2023. According to the 2022 annual report, the company achieved operating income of 1,170 million yuan in 2022, an increase of 39.94% over the previous year; achieved net profit of 306 million yuan, an increase of 29.14% over the previous year, and achieved net profit of 283 million yuan after deducting non-return mother net profit of 283 million yuan, an increase of 30.52% over the previous year. At the same time, the company disclosed its report for the first quarter of 2023. It achieved revenue of 263 million yuan in the first quarter of 2023, an increase of 29.73% over the previous year, and realized net profit of 73.35 million yuan, an increase of 18.08% over the previous year, after deducting non-net profit of 61.23 million yuan, an increase of 4.97% over the previous year.

In an environment where the global economy declined in 2022 and domestic consumer demand was shrinking, the company actively expanded its business fields, developed rapidly around the two main product lines of precision functional components and intelligent automation equipment, and provided customers with diversified and multi-field products and services. It maintained a good development momentum during the period, and its comprehensive strength increased steadily.

Business development has been very effective, and secondary growth has been flourishing. The company's traditional products are mainly used in the consumer electronics field. With the rapid development of 5G, big data, artificial intelligence and other technologies, and the rise of terminal consumer electronics such as smart wearables, smart homes, and smart security, the definition and application scenarios of consumer electronics products are constantly being refreshed. In 2022, the company continued to invest in R&D in the fields of new energy and new materials, maintained close cooperation with customers, and finally achieved industry implementation. The company successfully achieved technological breakthroughs and mass production and delivery of the company's new energy power batteries and energy storage batteries, providing new impetus for the company's development.

Pay attention to the efficiency of operation and management, and continue to increase investment in R&D. The company's core management has many years of experience in industry operation and management, and has formed a professional management team to quickly respond to customer needs and promote the company's sustainable and healthy development. In terms of cost control, by continuously improving the comprehensive budget management system, adhering to the “market-based production” production model and scientific inventory management principles, the company effectively reduces production operation management costs, improves production efficiency through automated upgrading and product process improvement, and reduces product production costs. In terms of R&D investment, the company attaches great importance to product development and technological innovation. Through continuous optimization of production processes, the company's unique R&D technology advantages have been formed. In 2022, the company's R&D investment reached 67.83 million yuan, an increase of 35.61% over the previous year, accounting for 5.80% of revenue. In the first quarter of 2023, the company continued to increase its R&D efforts. R&D investment reached 18.53 million yuan, an increase of 33% over the previous year, and its share of revenue increased to 7.05%.

[Investment advice]

The company always adheres to the mission of “continuous innovation and breakthrough, creating greater value” and is committed to becoming a first-class intelligent manufacturing and service company to provide quality services to customers around the world. While the electronics business grew steadily in 2022, the company actively expanded its business areas and achieved batch delivery, providing new impetus for the company's future development. We expect the company's net profit to be 431/572/738 million yuan in 2023/2024/2025, and the EPS for 2023/2024/2025 will be 3.57/4.74/6.12 yuan/share, respectively, and the corresponding PE will be 13/10/8 times respectively, giving it an “increase in holdings” rating.

[Risk Reminder]

Downstream demand fell short of expectations;

The progress of business development fell short of expectations;

Prices of upstream raw materials fluctuated sharply.