Incidents:
The company released its 2022 annual report, achieving operating income of 5.653 billion yuan, a year-on-year decrease of 1.16%; achieving net profit of 407 million yuan, an increase of 161.58% over the previous year; and achieving net profit of 59.34 million yuan after deducting non-return mother's net profit of 59.34 million yuan, an increase of 108.98% over the previous year.
Our reviews are as follows:
1. Endogenous growth momentum is strong. Strengthening channel construction to accelerate digital marketing layout Facing multiple challenges in 2022, the company achieved steady growth in the narrowband basic market business through channel construction, industry partner expansion, and comprehensive promotion of next-generation digital cluster products. The company achieved steady growth in the narrowband basic market business and promoted the consolidation of the growth business. Focusing on the “2+3+1" business strategy, the company built a fully integrated field application plan, steadily promoted domestic and overseas business, comprehensively expanded channels and industry partners, held partner summits and released global channel partner recruitment plans in various countries and regions such as the Middle East, Europe, America, and launched the “Hynengda Online Mall” domestically to create a dedicated communication cooperation ecosystem.
2. Increased profitability and enhanced ability to move steadily and far-reaching risks
The company achieved a gross profit margin of 46.72% in 2022, an increase of 3.69pct compared to '21 (43.03%), and its main gross margin increased steadily. At the same time, the company's net interest rate also increased significantly, mainly due to ① fine management, effective control of operating expenses, ② a significant reduction in the balance ratio, a year-on-year reduction in interest expenses, and ③ Sepura's share sales, which brought about 287 million yuan in investment income. It is expected that the company will continue to improve its profitability, carry out refined operations, effectively control expenses, and improve its resilience to risks and operating efficiency.
3. Looking ahead, private network leaders have consolidated their basic business, and innovative business companies have continued to consolidate their leading positions in domestic private networks, launch H series products, and have been applied in many projects around the world and large-scale orders have been formed. At the same time, in terms of public-school integration, the “White Paper on Public-Private Integration” and “Security White Paper” were published overseas, and more than 300 public-private integration platforms were built in cooperation with industry customers and more than 20 operators around the world, forming more than 100 industry application cases and creating an ecosystem of cooperation and symbiosis. In terms of satellite communications, the industrialization of terminal products under low-orbit satellites is being actively explored, and the development of low-orbit satellites has broad prospects. The company continues to expand and strengthen its narrowband basic market business, and will continue to make strong efforts in growing businesses, which can be expected in the future.
The company has built its core competitiveness by continuously increasing R&D, stabilizing its position as a leading domestic manufacturer in the private network field. At the same time, it has built an intelligent production and management system around the “Precision Intelligence Workshop” strategy to ensure product quality.
As the company continues to refine manufacturing and the influence of external factors in the early stages weakens, the company is expected to promote high-quality business development. Furthermore, compounded by the improvement of the epidemic, overseas demand is gradually recovering, and the company continues to sign contracts and orders with overseas customers, and the growth rate of overseas business is expected to recover.
Profit forecasts and investment suggestions:
The company is a leading manufacturer in the private network field, continues to consolidate its leading position and insists on high-quality operations. The company's net profit from 23 to 25 is estimated to be 4.5/54/635 million yuan respectively, and the corresponding PE is 26/21/18 times, maintaining the “increase in holdings” rating.
Risk warning: the risk of increased competition in the industry, the risk of geopolitical risks, the risk of litigation, the risk of technology iteration, promotion of public-private integration products falling short of expectations, etc.