The 22-year net profit was-41.6% compared with the same period last year. The "buy" rating company achieved a revenue of 3.367 billion yuan (yoy+23.0%) and a net profit of 103 million yuan (yoy-41.6%) in 22 years, which was consistent with the previous performance of KuaiBao (2023-004). 22Q4 realized a net profit of 23 million yuan (year-on-year turnround, qoq+0.6%), while 23Q1 realized a net profit of 73 million yuan (yoy+247.5%,qoq+219.2%), a significant increase from the previous month. Taking into account the impact of raw material price fluctuations, we estimate that the company's EPS in 23-25 is 1.47max 2.54 EPS 3.39 yuan (the previous value 2.59max 4.16 pound-yuan), and the average PE (2023E) of the comparable company is 19.9X. Considering the company's integrated industrial layout of special steel materials and parts, the company is valued at 24 times PE for 23 years, corresponding to the target price of 35.28 yuan (the previous value is 43.24 yuan), maintaining the "buy" rating.

Continue to dig deep into new materials and spare parts products, accounting for 60.0% of the revenue in the spare parts category in 22 years. According to the company's annual report, the company continues to optimize the product sales structure, and the revenue of spare parts products in 22 years is 1.97 billion yuan, up from 59.6% in 21 years to 60.0%. In terms of wind power castings, 22-year production and sales volume of 4.57 and 49200 tons (yoy-47.7%,-25.2%), gross profit margin 15.81% (yoy-6.13pct), mainly because the number of new wind power connected to the grid in China in 22 years decreased by 21.0% compared with the same period last year, and competition intensified; special alloy production and sales volume of 9195, 8232 tons (yoy+126.9%, + 78.8%), gross profit margin 33.68% (yoy+6.76pct) Wind power precision mechanical parts production and sales volume of 4.58,40900 tons (yoy+114.1%, + 65.7%), gross profit margin 18.96% (yoy-3.71pct); steel castings production and sales volume of 1.85,16400 tons (yoy+96.9%, + 107.0%), gross profit margin of 11.0% (yoy+4.49pct), mainly due to the release of Dongqi production capacity.

Fluctuations in raw material prices affect the company's profits, 23Q1 gross profit margin significantly improved according to the company's annual report and quarterly report, the company's sales gross profit margin in 22 years 15.93% (yoy-2.83pct), on the one hand, the weakening demand for wind power in 22 years, affecting the company's wind power product prices, on the other hand, the company needs scrap, pig iron, alloys and other raw and auxiliary materials prices are high. Looking forward to 2023, with the optimization of domestic epidemic prevention and control and the recovery of scrap supply chain, we expect the tight situation of scrap supply to be alleviated. The company's gross profit margin on 23Q1 sales has improved significantly. During the 22-year period of the company, the expense rate is 11.40% (yoy-0.03pct), in which the company continues to increase R & D investment, the R & D expenditure rate is + 0.54 pct compared with the same period last year, and the net sales interest rate is 3.35% (yoy-2.81pct).

New energy wind power, steel castings and military industry continue to promote.

According to the company's annual report, the company takes special steel materials as the cornerstone and continues to promote the key development of new energy wind power, steel castings and military industry. In terms of wind power, part of the production line of the company's convertible bond raising and investment project has entered the trial production stage. after reaching production, Xinsheng Manufacturing will have the production capacity of 84000 large wind turbine gearbox parts and other precision machinery parts. promote the localization process of the core parts of the wind power gearbox; in terms of steel castings, complete the production capacity and efficiency improvement of the steel casting plate of Dongqi Company, and expand the hydropower market expansion on the basis of thermal power and gas turbine fields. In the military industry, we will focus on the distribution of products such as superalloys and high-strength steel for military use to steadily promote market development.

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