Revenue fell 15% year over year in 2022, and R&D expenses reached 44%. The company's revenue in 2022 was 786 million yuan (YoY -15.37%), net profit of -73.36 million yuan (YoY -135.66%), after deducting net profit of -228 million yuan (YoY -735.62%). The gross margin for the whole year fell 14.4 pct to 31.18%, of which 4Q22 gross margin was 32.20% (YoY -13.1 pct, QoQ +5.0pct), the R&D fee rate increased 15.3 pct to 44.01%, the management fee rate increased 10.7 pct to 24.98%, and the sales rate remained flat at 2.14%.
Revenue increased year-on-year in the first quarter, and gross margin increased month-on-month. The company's 1Q23 revenue was 191 million yuan (YoY +10.07%, QoQ -17.32%), net profit of 15.43 million yuan (YoY -34.63%, QoQ +120.58%), net profit of the non-return mother was 13.12 million yuan (YoY +68.79%, QoQ +90.41%). The gross margin for 1Q23 was 36.16% (YoY +1.7pct, QoQ +4.0pct), and the rate for the period decreased 1.1 pct year over year.
Revenue from MEMS process development increased, and the yield of an 8-inch MEMS production line in Beijing exceeded 70%. Since 2012, the company has been in the top five global MEMS foundry revenue rankings, and jumped to number one in 2019-2021. MEMS wafer manufacturing revenue in 2022 was 378 million yuan (YoY -26.66%), accounting for 48%, with a gross profit margin of 18.18% (-8.9pct); MEMS process development revenue was 331 million yuan (YoY +10.30%), accounting for 42%, and gross profit margin of 49.19% (-31.3pct). Looking at the production line, the Swedish 8-inch MEMS production line had a production capacity of 84,400 pieces in 2022, with a capacity utilization rate of 46.56% and a yield of 70.97%; the Beijing 8-inch MEMS production line had a capacity of 82,500 pieces in 2022, with a capacity utilization rate of 16.90% and a yield of 72.69%. The monthly production capacity increased to 10,000 pieces at the end of the year, while continuing to carry out related work to expand the production capacity to 30,000 pieces/month.
The yield of Qingdao GaN epitaxial wafer production line is over 90%, and GaN epitaxial wafers and devices have been officially sold. In terms of GaN epitaxial materials, the company has a 6-8 inch GaN epitaxial material production line (phase I), with a production capacity of 10,000 tablets in 2022, a capacity utilization rate of 22.62%, and a yield of 91.32%. It has established cooperation with downstream customers to form a product sequence and promote it to the market to form official sales. In terms of GaN devices, the company has successively developed and launched power device products and application solutions of different specifications. At the same time, it is promoting the research and development of microwave device products, and has formed a product sequence and officially sold it to the market.
Investment advice: MEMS production capacity continues to expand, and capacity utilization is expected to increase. Maintaining the “buy” rating, we expect the company's net profit of 0.10/0.40/74 billion yuan in 2023-2025, a year-on-year growth rate of +113/+319/ +85%. The PB corresponding to the stock price on April 28, 2023 is 2.98/2.96/2.92x, respectively. The company's MEMS production capacity continues to expand, and capacity utilization is expected to increase, maintaining the “buy” rating.
Risk warning: production capacity release falls short of expectations; customer verification falls short of expectations; downstream demand falls short of expectations.