Event: the company releases its annual report for 2022 and quarterly report for 2023. In 2022, the company achieved revenue of 893 million yuan, down 5.94% from the same period last year; net profit of 122 million yuan, an increase of 31.49% over the same period last year; and basic earnings per share of 0.84 yuan per share. Of this total, the company's revenue in the fourth quarter was 208 million yuan, down 9.1% from the same period last year, and the net profit returned to its mother was 20 million yuan, down 4.62% from the same period last year. 2023Q1, the company's revenue reached 186 million yuan, down 2.82% from the same period last year; the net profit returned to its mother was 13 million yuan, an increase of 2.88% over the same period last year.

The gross profit margin rose & the expense rate improved and the company's net profit rate increased. In terms of gross profit margin, the company's comprehensive gross profit margin was 25.05% in 2022, an increase of 2.08 pct over the same period last year. Among them, Q4 single-quarter gross profit margin was 34.45%, an increase of 7.18 pct over the same period last year and 14.11 pct higher than the previous year.

23Q1's single-quarter gross profit margin was 22.28%, an increase of 3.33 pct over the same period last year, while a month-on-month decline of 12.17pct. In terms of expense rate, in 2022, the expense rate during the company period was 11.48%, a decrease of 0.76 pct over the same period last year. Among them, the sales / management / R & D / financial expense rate was 2.12%, 5.39%, 5.31%, 1.34%, respectively, with a year-on-year change of + 0.57 pct/+0.84 pct/-0.03pct/-2.13 pct. 2023Q1, the expense rate during the period of the company is 14.26%, which is higher than the same period last year. Among them, the sales / management / R & D / financial expense rate is 3.17% / 5.06% / 3.52% / 2.51%, respectively, with year-on-year changes of + 0.89 pct /-0.49 pct /-0.13 pct / + 1.94pct. In terms of net interest rate, in 2022, the company's net interest rate was 14.08%, an increase of 3.81pct over the same period last year. Among them, Q4 single-quarter net interest rate was 9.58%, down 0.31 pct from the same period last year, and 12.57 pct from the previous year. 23Q1's single-quarter net profit rate was 6.62%, up 0.07 pct from a year earlier and down 2.96 pct from a month earlier.

Functional security gloves decreased slightly compared with the same period last year, and the domestic market expanded rapidly. In terms of export, the company strengthens the development of emerging markets on the basis of stabilizing the North American and European markets, and deepens customer cooperation in Australia, Turkey, Nordic and other countries and regions. In terms of domestic sales, the company continues to strengthen the overall layout of industrial products major customer channels and circulation wholesale channels, and has established strategic cooperation with well-known domestic automobile manufacturing and new energy technology enterprises in the past 22 years, including BYD, Geely, Longji and so on. At the same time, the company started a project with an annual production capacity of 72 million dozen functional security gloves, and the construction is expected to be completed by the end of 2024. In 2022, the revenue of the company's functional safety protection gloves was 883 million yuan, down 5.17% from the same period last year; overseas / domestic markets achieved revenue of 818 million yuan respectively, with year-on-year changes of-8.28% and 30.01% respectively.

Master UHMWPE technology and promote production capacity construction quickly. Ultra-high molecular weight polyethylene fiber is widely used in military equipment, marine industry, security protection, construction, high-end textiles, sports equipment and many other fields. After years of deep research and development, the company has been able to produce UHMWPE fibers of different specifications from 50D to 1600D on a large scale. In 2022, the first phase of the company's fundraising project "Development and Application Project of Super Fiber New Materials and functional Safety Protective equipment" was completed and put into operation. UHMWPE fiber project design production capacity of 600T, actual production of 343t; the second and third phase of the new production capacity of 2400 tons of UHMWPE has been fully released.

Investment suggestion: the company is a functional security glove faucet, mastering the production capacity of ultra-high molecular weight polyethylene, rapidly promoting capacity construction, and is expected to achieve basic earnings per share of 1.12 / 1.57 / 2 yuan in 2023 / 24 / 25, corresponding to PE of 16X/ 11X / 9X, with a "recommended" rating for the first time.

Risk tips: demand is lower than expected, raw material prices fluctuate sharply, and industry competition intensifies.