incident. On April 18, Dingtong Technology released its 2022 annual report and the first quarter report of 2023.
In 2022, the company achieved operating income of 839 million yuan, an increase of 47.69% over the previous year; the net profit returned to the mother was 168 million yuan, an increase of 53.96% over the previous year. In Q1 of 2023, the company achieved operating income of 162 million yuan, a year-on-year decrease of 8.18%; the net profit of its mother was 33 million yuan, an increase of 3.06% over the previous year.
The communication+automobile business is driven by two-wheel drive to achieve both revenue and profit growth. In 2022, the company continued to develop its communication connector business steadily, while vigorously increasing the share of the automotive connector business. At the same time, the company actively promoted product upgrades to further increase product prices and help revenue and profit increase dramatically. In 2022, the company achieved operating income of 839 million yuan, an increase of 47.69% over the previous year; the net profit returned to the mother was 168 million yuan, an increase of 53.96% over the previous year. In terms of communication connectors, the company has established long-term and stable cooperative relationships with leading companies such as Amphenol, Moss, and Tyco Electronics. At the same time, the company continues to enrich its product types and achieve vertical business expansion according to customer needs. Among them, the 2XN CAGE series is gradually mass-produced, the proportion of products equipped with radiators continues to increase, and the selling price has increased relatively. The CAGE and structural parts business has also been integrated into the Tyco Communications business module.
In terms of automotive connectors, the company is gradually shifting to a Tier 1 supplier, continuously deepening cooperation with customers such as BYD, Honeycomb Energy, and Nandu Power. At the same time, it is actively developing leading car companies such as Xiaopeng Motor and Changan Automobile to promote the continuous improvement of the automotive connector business. In Q1 of 2023, the company achieved net profit of 33 million yuan, an increase of 3.06% over the previous year; it achieved operating income of 162 million yuan, a decrease of 8.18% over the previous year. As the credit period transitions, revenue growth will also return to the right track.
Continue to increase investment in research and development, and promote the release of production capacity through comprehensive layout. In 2022, the company incurred R&D expenses of 65.575 million yuan, an increase of 76.49% over the previous year; the number of R&D personnel increased from 177 in 2021 to 280. The company continues to expand communication connector product types and expand the CAGE product type for I/O connector housings. Products such as high-speed communication I/O and backplane connector components can be widely used in the data center and server industry. The development of high-speed connectors and server radiators has entered the small-batch trial production stage. At the same time, it is actively expanding the field of new energy vehicles and is committed to developing new products such as high-voltage connectors and electronic control connections. By the end of 2022, the company had invested a total of 306 million yuan in fund-raising projects, and the investment progress of the connector production base project had reached 74.61%. It is expected that the high-speed communication connector project will reach 47.7 million new production capacity after delivery, corresponding to an increase in annual revenue of 620 million yuan/net profit of 100 million yuan; the new energy vehicle connector project reached 24.9 million new production capacity after delivery, with corresponding additional revenue of 3.7 billion yuan/net profit of 0.5 billion yuan. As the company's production capacity is further released to continuously meet business development needs, it will help improve the company's performance level.
Profit forecast and investment rating: We expect the company's net profit to the parent for 2023-2025 to be 2.00/2.60/344 million yuan, 2023-2025 EPS of 2.02/2.64/3.48 yuan respectively, and the PE corresponding to the current stock price is 32/24/19 times respectively. As the company's market continues to expand and connector products and their components continue to innovate, we are optimistic about the company's future performance development and maintain the “buy” rating.
Risk warning: automotive connector market demand falls short of expected risks; risk of fluctuating upstream raw material prices; increased risk of market competition; production capacity release falls short of expected risks.