Revenue in '22 fell 23.37% year on year, and Guimu's net profit fell 65.32% year on year. The company's revenue in '22 was 3.874 billion yuan (YoY -23.37%), net profit of 327 million yuan (YoY -65.32%), and net profit returned to the mother after deduction was 60 million yuan (YoY -92.28%). The sharp decline in the company's performance was mainly due to: 1) the complex changes in international relations, which led to a sharp drop in demand and prices in downstream markets such as home appliances, communications, consumer electronics, etc. due to complex factors such as macroeconomic recovery falling short of expectations; 2) the company is in the construction period of major projects.
4Q22 revenue increased 19% month-on-month, showing signs of recovery. The company's 4Q22 revenue was 955 million yuan (YoY -13.17%, QoQ 19.23%), net profit of 142.19 million yuan (YoY -77.7%, turning loss into profit), and gross profit margin of 11.78% (YoY -14.59pct, QoQ +1.6%). The company's performance rebounded month-on-month in the fourth quarter, in line with the bottoming out of downstream sentiment. According to TTI data, delivery dates for some high-pressure, high-capacity, and large-size MLCC models rebounded in December '22. TrendForce statistics, the BB values of major MLCC manufacturers around the world bottomed out in December. As market inventories enter normal levels and downstream demand recovers, the company's performance is expected to usher in a rapid recovery.
Non-public offerings bring in new shareholders and accelerate changes in institutional mechanisms. Through fixed increases, the company successfully introduced two strategic shareholders, SDIC Investment Investment and Hengkuo Investment, which hold more than 5% of the shares, and adjusted decision-making authority on some key matters, which is conducive to promoting the company's market-based reforms, and reforming the R&D system, supply chain system, marketing system, remuneration incentives and other systems to accelerate market-based transformation.
Pay attention to research and development, and actively explore high-end markets such as vehicle regulations and medical care. In '22, the company continued to increase investment in R&D, introducing 2 key technical teams and 24 experts and consultants. The share of the company's high-end capacitors and resistors output increased by 14% and 6%, respectively; PIM micro integrated inductors achieved mass production; the self-production rate of high-end materials increased by nearly 10 percentage points; other niche products also achieved breakthroughs, successfully developed high-voltage high-voltage high-voltage ripper-resistant cover plate products, copper-electrode pressure-sensitive resistor products, etc. Some specifications of wafer porcelain dielectric capacitors reached the level of advanced international peers and achieved domestic substitution in the supply chain of core customers. Supercapacitor 10 Farah products passed national grid certification, and achieved key technological breakthroughs in energy lithium-ion product development.
Investment advice: Considering that the recovery in downstream demand is not clear yet, the recovery in the first quarter was weak, and the competitive environment further intensified, we lowered our profit forecast until 23/24/25, net profit returned to the mother increased 119%/42%/19% year-on-year to 7.16/10.18/1,209 billion yuan. The corresponding PE was 28.7/20.24/17.0 times, maintaining the “buy” rating.
Risk warning: terminal demand falls short of expectations; capacity expansion falls short of expectations; industry competition intensifies.