Event: On April 28, 2023, the company released its 2022 annual report and 2023 quarterly report. Revenue for the full year of '22 was 2,960 million yuan, an increase of 9.05% over the previous year; realized net profit of 247 million yuan, a decrease of 11.58% over the previous year; net profit after deducting the return of the mother was 234 million yuan, a decrease of 9.36% over the previous year. 23Q1 achieved revenue of 650 million yuan, a year-on-year decrease of 3.87%; realized net profit of 32 million yuan, a decrease of 16.95% over the previous year; net profit of the non-return mother was 29 million yuan, a year-on-year decrease of 24.39%.
Profitability continues to improve, and investment in core business R&D has been increased. In terms of profitability, the company's gross margin for the full year of '22 was 38.20%, an increase of 0.54 pct over the previous year. Among them, the average gross margin of its main business, the motor control motor and drive system business, was 40.63%, an increase of 1.19 pcts over the previous year. The increase was mainly due to the optimization of the company's product structure, and future gross margin levels are expected to continue to rise. In terms of R&D, the company invested 218 million yuan in costly R&D in '22, an increase of 17.27% over the previous year, accounting for 7.38% of revenue. The company increased its investment in the two core businesses of controlling motors and their driving systems, and LED intelligent control and drive systems. In '22, the company obtained 5 invention patents, 44 utility models, 6 design designs, and 6 software copyrights.
The main product line continues to improve, driving the rapid growth of the control system business. In '22, the company continued to optimize its product structure to create products with core competitiveness in the fields of informatization, automation and intelligent applications.
1) Brushless motors: The company implemented the “Brushless Motor New Production Capacity Project” as planned. With the steady increase in production capacity and performance growth in downstream application fields, it achieved 173 million yuan in '22, an increase of 53% over the previous year; 2) Precision linear transmission systems: the company focuses on key industries and actively expands the stock market share through continuous improvement of platform-based products. Related businesses achieved revenue of 85 million yuan, with a compound growth rate of more than 26% over 3 years; 3) Drive control system: the company strengthens technological breakthroughs, product development and renewal of drive control products, while focusing on strategic development and development industry. In '22, the world achieved total revenue of 706 million yuan, an increase of 20% over the previous year. Among them, the servo system business achieved revenue of about 188 million yuan, an increase of 90% over the previous year, and achieved rapid growth.
The layout of emerging, high-value-added fields has achieved remarkable results, and overseas business has developed rapidly. In '22, the company laid out new businesses in the field of high-value-added applications and achieved remarkable results, with a total year-on-year increase of about 392 million yuan in operating revenue. These include industrial automation (+32% YoY), medical devices and biochemical analysis (+27% YoY), mobile service robots (+103% YoY), photovoltaic/lithium battery/semiconductors (+17% YoY), and smart car electronics (+20% YoY). In addition, the company's overseas business developed more rapidly year-on-year in '22, achieving revenue of 1,425 billion yuan, an increase of 23.54% over the previous year. Among them, overseas revenue increased 37.53% year-on-year in the second half of '22. Overseas business grew rapidly, mainly due to the company's global supply chain and product development platform, which promoted deep customization and modular production by customers.
Investment advice: We expect the company's revenue for 2023-2025 to be 3898, 51.93 and 7.016 billion yuan respectively, with corresponding growth rates of 31.7%, 33.2% and 35.1% respectively; the net profit of the mother is 4.25, 648 and 1,034 billion yuan respectively, and the corresponding growth rates are 71.9%, 52.3% and 59.6% respectively, based on the closing price on May 5, corresponding to PE 39, 25 and 16 for 2023-2025. Maintain a “Recommended” rating.
Risk warning: the risk that the spread of the epidemic exceeds expectations; the risk that commodity prices will rise more than expected, etc.