In 2022, the company achieved a net profit of 613 million yuan (year-on-year + 10.9%), deducting non-return net profit of 562 million yuan (year-on-year + 6.4%), of which Q4 net profit was 168 million yuan (year-on-year + 55.1%, month-on-month + 9.7%). Deducting the non-return net profit of 154 million yuan (year-on-year + 48.8%, month-on-month + 8.2%), the overall performance is in line with expectations. In 2023, policy and demand resonance promote the rapid development of the charging pile industry, superimposed thermal insulation materials benefit from fast charging & battery structure changes, the company's new energy business is expected to benefit from the high growth of industry segments; in terms of traditional business, the existing market bottom is clear + high gross margin market continues to expand, the company is expected to return to the rapid upward channel. We are optimistic about the long-term competitiveness of the company, maintain the company's 2023 15 times PE valuation, corresponding to the company's target market value of 12.1 billion yuan, the target price of 9.6 yuan, maintain the company's "buy" rating.

The performance is in line with expectations and the profitability has improved steadily. The company announced that KuaiBao achieved a total operating income of 5.359 billion yuan in 2022, a year-on-year net profit of-0.9%, a net profit of 613 million yuan, and a total operating income of 1.474 billion yuan, a year-on-year of-0.8%, a month-on-month ratio of + 9.6%, and a net profit of 168 million yuan, + 55.1% and 9.7%, respectively. Overall, the company's performance in 2022 is in line with expectations. On the profit side, due to the continuous optimization of the company's product structure, the continuous development of the high gross margin market, the month-on-month improvement of Q4 profitability, the annual return net interest rate reached 11.4%, year-on-year + 0.6pct.

Industry: policy-demand resonance promotes the accelerated development of new energy market, and the bottom of traditional business is clear. New energy business: as a supporting infrastructure to support the development of new energy vehicles, charging piles, driven by both the policy side and the demand side, are expected to enter a period of accelerated construction in the future. On the policy side, China has issued policies one after another since 2015 to guide the construction of charging infrastructure, and Europe and the United States have also increased support to increase subsidies and tax incentives; on the demand side, the high sales of new energy vehicles have stimulated the construction of charging piles. We expect the market for charging guns to reach 3.2 billion yuan in 2025 and 56% CAGR in 2022-2025, of which DC guns benefit from rapid charging demand growth, market share is expected to reach 65% in 2025. In addition, with the increasing demand for thermal management of power batteries, the demand for battery insulation materials is expected to continue to increase. Electronics & wire business: at present, orders have shown a weak recovery, the industry chain is expected to pick up the overall industry is strengthening, medium-term demand will be improved.

In-depth cooperation with the top quality customers in various industries, the market share of market segmentation has increased steadily. In terms of charging guns, the company cooperates deeply with pile-end enterprises, and downstream customers include Luneng Group, Special call, Xuji Electric and other enterprises, while the technical end has mastered the core technology of high-power liquid-cooled charging guns; in terms of high-voltage connectors, the company is deeply bound with Dongfeng Liuqi and brilliance Xinyuan, and actively expand the head mainframe factory; in terms of lithium insulation materials, Shanghai Cote continues to expand downstream power battery customers. In the power business, the company's cable accessories are favored by China Southern Power Grid, State Grid, China Petroleum & Chemical and Petrochina Natural Gas Group.

The high-growth enterprises of "new materials + new energy" fully benefit from the outbreak of demand for new energy charging gun + lithium insulating materials. The company is a comprehensive enterprise of "new materials + new energy". The three traditional businesses of electronics, power and power lines continue to develop, the proportion of high gross profit business continues to increase, and the new energy business is growing explosively. 1) New energy business: charging gun + high-voltage connector two-wheel drive, DC charging gun as shield, high-power liquid-cooled charging gun as spear, high customer recognition + high gross margin advantage is clear, lithium thermal insulation materials benefit from battery technology innovation, will build the company's second growth pole. 2) Wire business: the three high-tech businesses of power high-speed communication line, automobile industry line and industrial robot line are expected to achieve a rise in volume and profit. Leting Wire, a subsidiary, has completed the shareholding system reform and is proposed to be spun off to be listed on gem.

3) Electric power business: fully benefit from the beta of the power grid industry, the volume of cable accessories has increased, and the subsidiary Shanghai Cote has the first market share in ceramic silicone rubber refractories. 4) Electronic business: the traditional consumer electronics market is picking up, and the logic of domestic substitution in high-end markets such as nuclear power, automobile, medical care and other high-end markets is clear, the company's electronic business will welcome another spring, and we expect the company's future performance to meet a breakthrough.

Risk factors: sales of new energy vehicles fall short of expectations; rising battery prices affect short-term market demand; increased competition in the industry; the construction of charging piles is not as expected; production and sales of lithium insulation materials are not as expected; consumer electronics is in the doldrums; the risk of fluctuation in raw material prices; the company's new customer development is not as expected.

Investment advice: in 2023, the new energy business, policy and demand resonance to promote the rapid development of the charging pile industry, superimposed thermal insulation materials continue to break out, the company is expected to fully benefit the rapid growth of the industry segment. In terms of traditional business, the bottom of the existing market reverses and the high gross margin market continues to expand, and the company is expected to return to the fast rising channel to maintain the company's 2023-24 net profit forecast of 1.096 million yuan, corresponding to the 2023-24 EPS forecast of 0.64 million yuan per share. With reference to the traditional business comparable company Zhongtian Technology PE13x in 2023, the new energy business comparable company Rekoda PE27x and Saiwu Technology PE20x (based on the consensus expectation of wind), we maintain a 15-fold PE valuation for the company in 2023, corresponding to a market capitalization of 12.1 billion yuan and a target price of 9.6 yuan per share, maintaining a "buy" rating.