Introduction to this report:

The results for '22 and 23Q1 were in line with expectations; the terminal consumer market recovered, and the packaging business performed well throughout the year; orders for component automation increased, and we are optimistic about the delivery of full-year results; TOPCon+HJT+ perovskite blossomed more frequently to support medium- to long-term development.

Key points of investment:

Maintain the increase in holdings rating. The company achieved revenue of 4,868 million/ +19.14% in 2022; net profit of the returned mother was 302 million/ +107.04%; net profit of the non-return mother was 283 million/ +112.01%; 22Q4 achieved revenue of 1,760 million/ +29%, net profit of the return mother was 101 million/ +6838%, net profit of the non-return mother was 196 million/ +21555%; 23Q1 achieved revenue of 1,327 million/ +28%, net profit of the return mother was 0.3 million/ +61%; net profit of the non-return mother was 0.48%/+68%. Considering the high increase in orders, the EPS forecast for 23-24 was slightly raised to 0.73/0.94 yuan (previously 0.71/0.89 yuan), and the additional 25-year EPS was 1.13 yuan, maintaining the target price of 28.4 yuan.

The terminal consumer market is recovering steadily, and the performance of the traditional packaging business is improving throughout the year. According to the China Post Office, the growth rate of express delivery business in 23Q1 is expected to be +12.7% year-on-year, and the recovery in terminal consumption will gradually spread upstream; benefiting from product upgrades, “smart factories”, the company will fully benefit from its long-term experience as an established packaging automation equipment vendor. In early '23, the company signed big orders for smart factory whole-plant projects with two leading listed companies (Inner Mongolia+Zhejiang), and we are optimistic that the growth rate of the packaging business will reverse throughout the year.

Orders for component automation have increased rapidly, and we are optimistic about the delivery of full-year results. By the end of '22, the company's PV sector had orders of 54.44 billion (tax included), and contract debt was 1,644 million/ +24%; 23Q12023Q1 had announced that major customers had automated orders of over 100 million modules of nearly 2 billion dollars (tax included), including Xinshi Solar (India) 282 million yuan, Jingao 309 million yuan and Tongwei 1,308 million yuan, and contract liabilities of 2,514 million/ +88% /+53% over the previous month.

TopCon+HJT+ perovskite blossomed at multiple points to support medium- to long-term development. 1) TopCon Technology's 2-in-1 coating equipment has been delivered; 2) HJT has signed an order for 4GW cleaning and velvet cleaning equipment, and a test mechanism for copper grid heterojunction electroplating wet plating equipment is in preparation; 3) Perovskite is based on PVD coating machines (MW grade has been shipped and has GW level shipping capacity) and already has the “turnkey” capability for MW experimental production lines.

Risk warning: New product development falls short of expectations, downstream demand falls short of expectations, and market competition intensifies.