Event: the company releases its annual report for 2022. For the whole year of 2022, the company achieved revenue of 340 million yuan, + 32.2% compared with the same period last year, and net profit of 96.09 million yuan, + 59% over the same period last year. Among them, single Q4 achieved revenue of 120 million yuan, year-on-year + 41.7%, month-on-month + 30.7%; return to the mother net profit of 34.386 million yuan, year-on-year + 86.9%, month-on-month + 8.3%.

Internal and external repair, performance into a high growth channel. The company benefits from the strong demand of downstream smart energy (electric new + mine), intelligent manufacturing, intelligent transportation and other fields, as well as its own continuous investment and layout optimization in the sales link, the company has full orders throughout the year and achieved rapid performance growth. At the same time, the company has carried out internal organizational change and optimization, human efficiency has been greatly improved, and the rate of three expenses has been reduced by 2.1pp compared with the same period last year. In terms of profit margin, the company's annual gross profit margin was 58.2%, a decrease in 2.2pp compared with the same period last year, mainly due to changes in product structure. The net interest rate for the whole year was 28.4%, an increase in 4.7pp compared with the same period last year, due to the optimization of fees and a small increase in government subsidies.

Downstream digital intelligence demand is high, the industrial Internet industry has a strong β attribute. China's industrial Internet industry has a high bearing. According to IDC, the market size of China's industrial Internet platforms and solutions reached 30% CAGR from 2021 to 2025. In the field of smart mines, on February 2, four departments issued management measures for coal mine safety transformation, which will subsidize up to 30 million yuan to single coal mines to improve coal mine safety and intelligent production, and all kinds of coal mines across the country are expected to be basically intelligent by 2035. In the field of intelligent manufacturing, the 14th five-year Plan makes it clear that intelligent manufacturing is the only way for China's development, and the industry is expected to maintain a compound growth rate of about 15% in the future. In addition, the digital construction of smart cities, highways, rail transit, intelligent medical and other industries all have a huge demand for industrial communication equipment. The company's customers include industry leaders such as central enterprises, state-owned enterprises, listed companies and subsidiaries. It is expected to enjoy high dividends in the industry by virtue of its profound technology accumulation and industry-wide business layout. In 2022, the company's revenue from smart energy and industrial Internet segments increased by 56.5% and 99.2% compared with the same period last year.

Technology forward-looking layout, the industry leader has its own α. The company takes the HaaS platform as the fulcrum and relies on new technologies such as TSN, artificial intelligence and digital twins to create a full-stack industrial Internet solution.

In 22 years, the company invested 57.67 million yuan in R & D, accounting for 17.2% of revenue. The company has products landing in TSN, industrial 5G, intelligent gateway, industrial WiFi6 and other fields, and the projects under research include AI edge computing gateway, TSN switch and other projects, deeply grasping the development trend of the industry. We believe that with the rapid expansion of TSN switches, AI edge computing gateways and large-bandwidth switching routing equipment, the average value of products will continue to increase, superimposed on the growth of market scale in downstream areas, and the company will usher in a golden period of rising volume and price.

Profit forecast and investment advice. It is estimated that the company's EPS in 23-25 will be 2.8,3.86,5.36 yuan respectively, corresponding to 40 times, 29 times and 21 times of PE, respectively, maintaining a "buy" rating.

Risk tips: industrial Internet development is not as expected, market development is not as expected, and so on.