Incident: On April 27, the company released 2022 and 2023Q1 performance reports. 2022/2023Q1, the company achieved revenue of 1,592/314 million yuan, +27.62%/+15.90% year on year, and achieved net profit of 193/021 million yuan, +46.90%/-12.69% year on year.
Revenue continues to grow, and Q1 performance is under short-term pressure. In 2022/2023Q1, the company achieved revenue of 1,592/314 million yuan, +27.62%/+15.90% year on year, and achieved net profit of 193/021 million yuan to the mother, +46.90%/-12.69% over the same period last year. The rapid increase in revenue is mainly due to a marked increase in demand for cooling materials for new models of stand-alone models from major North American customers, and the company supplied more high-priced, high-value-added products. At the same time, sales revenue from other industries such as digital infrastructure also maintained a steady growth trend.
The overall ability to control expenses was stable, and the cash flow situation improved markedly. In 2022/2023Q1, the company's gross margin was 28.19%/23.66%, +2.04/-1.98pct over the previous year; the profit margin was 12.07%/6.60%, +1.58/2.07pct over the previous year. Profitability increased last year, mainly due to the company's continuous optimization of production processes, expansion of production capacity, and increased yield. In 2022/2023Q1, the company's fee rate for the period was 14.24%/17.32%, compared to -1.7/+0.45pct. Expenses increased in the first quarter, mainly due to the decline in exchange earnings, and the increase in sales expenses due to the increase in sales expenses due to the increase in sales teams for new businesses. In 2022/2023Q1, the net cash flow from the company's operating activities was 349/86 million yuan, +120.35%/+1,394.02% compared to the previous two quarters, mainly due to continued revenue growth in the past two quarters and a year-on-year increase in futures payments recovered during the reporting period.
Continue to expand the customer base and accelerate the transformation to a comprehensive solutions provider. In terms of product composition, the company has gradually provided comprehensive solutions for the industry from following product development for major customers to planning the company's technology and product roadmap according to the industry development plan, providing comprehensive solutions such as advanced thermal management, electromagnetic shielding, bonding and sealing around the reliability of electronic equipment. Among them, thermal solutions include graphite, thermal interface materials, heat pipes, heating plates, cooling modules, which can be widely used in consumer electronics, communication equipment, server/data centers, new energy, etc. On the customer side, the company continuously forms replicable overall industry solutions based on existing telecommunications consumer electronics and communications industry customers, extends them to more consumer electronics and communications industry customers and customers in high-growth industries such as digital infrastructure, intelligent transportation, and clean energy, further expanding the resource pool of high-quality customers. In 2022, the company has obtained many industry-renowned customer supplier codes or development targets, and some projects have entered the middle and late stages of certification before mass production. We believe that with the advancement of the company's thermal module fund-raising project and the continuous expansion of downstream fields and customers, the company is expected to enjoy growth in many industries, enhance risk resistance, and achieve rapid growth in performance.
Profit forecast and investment rating: We expect the company's net profit to be 2.57/347/474 million yuan for 2023-2025, respectively, and EPS of 0.92/1.24/1.69 yuan respectively. The current stock price corresponding to PE is 35.1/26.0/19.0 times, respectively, maintaining the “buy” rating.
Risk warning: customer expansion falls short of expectations, downstream demand falls short of expectations, risk of fluctuations in raw material prices, risk of macroeconomic fluctuations.