Multiple factors contributed to poor Q4 performance, which dragged down full-year results

In 2022, the company achieved revenue of 768 million yuan (year-on-year growth rate -0.78%) and net profit of 146 million yuan (year-on-year growth rate of -8.34%); of these, the company achieved revenue of 152 million yuan in the single quarter of 2022/Q4 (year-on-year growth rate of -23.38%, month-on-month growth rate of 6.60%), and Guimu's net profit of -0.09 million yuan (year-on-year growth rate -120.17%, month-on-month growth rate -131.80%). The company's expenses due to equity incentives totaled about 15.59 million yuan. Excluding the impact of share payments, the company achieved net profit of 162 million yuan attributable to shareholders of listed companies during the reporting period, an increase of 1.39% over the same period last year. Due to factors such as geopolitical tension and the overall poor performance of the consumer electronics market, the company's performance was affected to a certain extent. Due to changes in product structure, sales of high-margin products increased. The company's comprehensive gross margin was 44.63%, an increase of 5.63 percentage points over 2021. The company plans to distribute a cash dividend of 5 yuan (tax included) for every 10 shares to all shareholders without bonus shares; at the same time, the capital reserve fund will be used to transfer 4.9 shares to all shareholders for every 10 shares.

Expand the R&D team and enrich the range of automobiles, communications and industrial products. Companies have been deeply involved in the field of power management for nearly 20 years. The number of R&D personnel increased to 199 in 2022, an increase of 35 over the same period last year. The average salary of the company's R&D personnel reached 301,400 yuan/year, an increase of about 44,000 yuan over the same period last year. The company began with R&D to accelerate product transformation to meet customer needs in new application fields. In terms of product types, the company actively develops and promotes other types of products such as intelligent networking delay management units and signal chain chips. On the market side, the company focuses on advantageous areas. Apart from consumer electronics fields such as mobile phones and wearable devices, the company will respond positively to market demand and continue to strengthen its layout in other application fields such as automotive electronics, network communications, and industrial electronics. It has now successfully entered BYD's supply chain.

The flexibility of the electronic detonator business can be expected

According to the China Blasting Equipment Industry Association, the production of electronic detonators in 2022 was 340 million units, an increase of 110% over the previous year. The share of electronic detonators in total industrial detonator production has also increased further, with production increasing from 18% in 2021 to 43% in 2022. In the first quarter of 2023, the cumulative production of electronic detonators was 120 million, an increase of 226% over the previous year. The company's subsidiary Kentuowei's digital detonator business volume has risen sharply. The company's intelligent networking delay management unit products are mainly used for electronic detonators. Sales revenue in 2022 was about 72 million yuan, up 56.32% year on year, sales cost increased 42.35% year on year, and gross margin increased 6.08% year on year. It is expected that as the penetration rate of electronic detonators increases, the company is expected to obtain higher flexibility in the electronic detonator business with advanced control chip technology.

Investment advice

The company's overall operation is stable. Considering the downturn in the consumer electronics cycle, the growth rate of the company's mobile phone business has been lowered, and the company's R&D expenses have been raised. The company is expected to achieve net profit of 200 million yuan, 246 million yuan and 295 million yuan respectively in 2023-2025. The current stock price (2023/4/13) corresponds to PE 41.33, 33.67, and 28.07 times, respectively. Maintain a “buy” rating.

Risk warning

The risk of weak downstream consumption, the risk of customer concentration, the risk of new product development falling short of expectations, and the risk of increased competition in the industry