The company released its 2023 annual performance report. It is expected to achieve annual revenue of 493 million yuan, an increase of 27.49% year on year; achieve net profit of 94.47 million yuan, an increase of 34.29% year on year; and achieve net profit after deduction of 87.38 million yuan, an increase of 40.56% year on year.

The company's revenue grew steadily throughout the year, mainly due to the increase in sales of industrial IoT communication products and intelligent distribution grid condition monitoring system products. Among them, the revenue of industrial IoT communication products increased by 25.13% in 2023, mainly benefiting from the company's continued deep cultivation in overseas markets and the smooth promotion of new products such as vehicle gateways and edge computing gateways; revenue from smart distribution grid condition monitoring system products increased by 58.15%, benefiting from the recovery in demand in the domestic power distribution network market and driving the company's IWOS product sales.

The company's overall profitability improved in 2023. In 2023, the company's overall net interest rate was 19.1%, up 0.9 pct year on year; the weighted average ROE was 10.86%, up 1.89pct year on year.

23Q4 continued to achieve steady growth in a single quarter. The 23Q4 quarter is expected to achieve revenue of 141 million yuan, an increase of 39.2% year on year; realized net profit of 0.26 million yuan, an increase of 28.9% year on year; realized net profit of 25 million yuan after deduction, an increase of 48.9% year on year. The net profit margin for the 23Q4 quarter was 18.1%, down 1.4pct year-on-year, or because the company increased investment in market and R&D.

The pace of overseas market expansion has been stepped up, and new and old products have gone overseas to make breakthroughs. All of the company's product categories support global sales. In 2023, the company increased capital to Inhand in the US to build a global sales system and expand the market. Overseas markets have always been the main battleground for industrial IoT communication products. Vehicle gateway and enterprise branch network projects have all been launched overseas. In the field of electricity, IWOS products have been piloted in 20 countries including Saudi Arabia, Thailand, Indonesia, and Malaysia. The pilot work is progressing smoothly in some regions. Orders have already been placed in countries such as Thailand, Malaysia, Turkey, Slovakia, etc., and it is expected that they will further benefit from the construction of global smart grids in the future. Some projects of intelligent sales control system products have also been launched overseas.

Investment advice: The company's net profit for 2024-2025 is expected to be 127/158 million yuan, corresponding PE is 19/15X, respectively, to maintain a “buy” rating.

Risk warning: Overseas economic recovery is slower than expected; new products fall short of expectations; risk of exchange rate fluctuations.