Incidents: In 2022, the company achieved revenue of 1,930 million yuan, an increase of 30.27%; net profit attributable to the parent company of 177 million yuan, an increase of 7.89%; net profit of 144 million yuan not vested in the parent company increased 5.13%. 2023Q1 achieved revenue of 380 million yuan, an increase of 44.85%; net profit attributable to the parent company was 0.2 million yuan, a decrease of 64.51%; net profit attributable to the parent company was -0.08 billion yuan after deducting net profit not attributable to the parent company.

The expansion of multiple categories progressed in an orderly manner, and revenue continued to grow rapidly. By business, the company's aluminum mold/protective platform/prefabricated parts/scrap/other revenue in 2022 was 1,793/2.02/1.92/1,77/ 177/065 million yuan respectively, compared with 13.30%/54.25%/381.55%/22.26%/171.94%. The protective platform and prefabricated parts business grew rapidly; by region, the domestic/external revenue was 1,639/291 million yuan, an increase of 22.10%/109.09%, and overseas business grew rapidly; by quarter, the company's 202Q1- 2023Q1's revenue was 2.62/5.19/5.20/6.28/380 million yuan, with a growth rate of 16.89%/36.41%/29.23%/32.57%/44.85%. Among them, the net profit of 202Q4/2023Q1 was 0.50/0.02 billion yuan, a growth rate of -16.75%/-64.51%. Although the first quarter was a traditional low season, the company's 23Q1 revenue continued to grow rapidly, benefiting from the increase in domestic mold business volume, active development of international market business, and increased production and sales of prefabricated PC components; however, the postponement of some projects combined with the rapid expansion of the company's protective platform business scale, leading to high depreciation costs, putting pressure on the company's performance in the short term.

Gross margin has declined, and the expansion of scale has led to an improvement in the cost ratio. The company's gross profit margin in 2022 fell by 30.95% by 1.51 pct, and the 2023Q1 gross profit margin of 24.09% fell by 5.84 pct, mainly due to the increase in the share of protective platforms and prefabricated prefabricated parts business with low gross margin. The expense rate for 2022 was 17.95% and 1.16pct. Among them, the management (including R&D) /sales/financial expenses ratio was 9.30%/6.65%/2.01%, respectively, and -0.74pct/-0.32pct/-0.11pct; the asset and credit impairment loss rate was 3.05%, up 1.82 pct; and the net interest rate returned to 9.19% and fell 1.91 pct. The company's net operating cash flow in 2022 was 225 million yuan, an increase of 398 million yuan over the same period last year, mainly due to an increase in accounts receivable and external purchase payments; the payout ratio was 77.06%, down 18.36 pct, and the payout ratio was 92.47% and an increase of 13.22 pct. As of 2023Q1, the company's accounts receivable and notes, inventory+contract assets, accounts payable and notes, accounts receivable and notes, and accounts receivable plus contract liabilities were $1,033/3.74/759/196, respectively, a change of -1.56%/29.38%/20.59%/20.59%/8.87% respectively from the beginning of the year.

The issuance of convertible bonds has been implemented, and the scale and type of business may expand at an accelerated pace. The company recently issued convertible bonds. The funds were used to build the Jiangmen Zhite Production Base (Phase II) and the Chongqing Zhite Production Base (Phase I), respectively. It is estimated that the production capacity of aluminum molds with an annual output of 30/600,000 square meters and 10,000/5,000 place-mounted safety protection platforms will be formed in Jiangmen/Chongqing, respectively. The new production capacity will better cover South China and Southwest China, better complement the support ratio between protective platforms and aluminum mold business in terms of business, and increase customer unit prices. In addition, the company is actively developing the “Belt and Road” market. Currently, the company has a business layout in Malaysia, Singapore and Cambodia. Some projects are already in the construction stage, such as the DTSS2-T11 public drainage tunnel shaft project in Singapore. The company provided customized formwork products for the project, and dispatched personnel to overseas companies for a long time to develop personalized solutions for shafts of different diameters, demonstrating the company's technical and service capabilities.

Investment advice: In the short term, we are concerned about the recovery in construction and resumption of work data and the release of downstream demand brought about by the moderate recovery in real estate. In the long run, the “aluminum instead of wood” policy and the significant economic benefits of superimposing aluminum formwork will bring about a double increase in performance and market share. We expect net profit attributable to the mother in 2023-2025 to be 247/332/449 million yuan respectively, an increase of 39.32%/34.50%/35.05%, and EPS of 1.51/2.03/2.74 yuan respectively. The current stock price corresponding to PE is 22.61/16.81/12.44 times, maintaining the “increase in holdings” rating.

Risk warning: risk of macroeconomic fluctuations; risk of upstream raw material price fluctuations; liquidity risk