Incident: The company released its annual report for '22 and the quarterly report for '23. It achieved revenue of 844 million yuan for the full year of '22, an increase of 54.52% over the previous year, a year-on-year increase of 135 million yuan, an increase of 107.41% over the previous year, after deducting 127 million yuan of net profit from non-Gwimo, an increase of 122.23% over the previous year. The first quarter of '23 achieved revenue of 208 million yuan, an increase of 93.37% over the previous year, and Guimu's net profit of 37 million yuan, an increase of 384.51% over the previous year, after deducting net profit of 28 million yuan from non-Gwimo, an increase of 612.28% over the previous year, exceeding market expectations.
Revenue from the smart meter business surged 108.52%. I am optimistic that 23 will be a big year in the boom cycle. The company's smart meter business is the company's core business. The revenue growth rate over the years of 2019-2022 was -12.21%/-9.45%/-15.40%/108.52%, respectively, and the shipment volume was 226.29/212.86/155.79/2.301,000 units respectively. Revenue and shipments both hit new highs in 5 years. We think the main reason is post-pandemic recovery and the advent of the smart meter boom cycle. In the context of the 8-year verification cycle for smart meters and the next 10 years for distribution grids or the main investment in power grid equipment, we believe that the growth rate of smart meters in the entire industry may exceed 50% in 23. As the backbone of the industry, the company is expected to fully benefit from the boom cycle.
The logic behind the sharp rise in smart meter profits is obvious. In terms of volume, smart meters generally need to be replaced in 8-10 years, 17-25 is a new smart meter cycle, and 23-25 is about to enter a rapid release period. We expect the number of single-phase electricity meters tendered by the State Grid in 2023 to be 95.28 million, an increase of 69.18% in 2023 compared to 2022. On the positive side, the benefits of the company's smart meter tender forms are expected to increase under the new standards. In 2020, the State Grid issued new technical standards for electric energy meters in procurement standards. Among them, the new standard for smart electric energy meters is expected to lead to a steady rise in tender prices as a transition product close to IR46. As the bidding ratio for new standard electricity meters increases, the company's single meter revenue is expected to continue to increase.
Investment advice: Considering the high boom cycle of the company's traditional smart meter business and the strong beta background of the company's charging pile business, we are optimistic about the company's future development. We forecast that 23-25 revenue will be 10.73/1307/1,599 billion yuan respectively, and the net profit of the mother will be 216/285/358 million yuan respectively. The corresponding EPS will be 1.05/1.40/1.75 yuan/share respectively, and the corresponding PE will be 16.41/12.40/9.87 times respectively, giving a “increase in strength” rating.
Risk warning: The bidding volume of downstream smart meters fell short of market expectations; fluctuations in smart meter tendering prices exceeded expectations; distribution grid development fell short of market expectations.