The company released its semi-annual report on August 9, 2023: the company's revenue in the first half of 2023 was 944 million yuan, down 6.59% from the same period last year; the net profit was 21 million yuan, down 38.36% from the same period last year; and 18 million yuan was deducted from non-home net profit, down 42.73% from the same period last year. It is calculated that the company's 2023 Q2 achieved revenue of 530 million yuan in a single quarter, down 9.68% from the same period last year, but increased by 28.02% month-on-month, and achieved a net profit of 13 million yuan, down 37.98% from the same period last year, but 62.5% higher than the same period last year.

Main points of investment

Weak consumer electronics demand, short-term performance under pressure

Affected by the downturn in the global consumer electronics market and the destocking of the electronics manufacturing industry, the demand for smartphones, PC and other terminal devices continues to be weak, and it is difficult for the semiconductor industry to recover in the short term. According to industry consultants such as Gartner and WSTS, capacity utilisation in global fabs will fall to 85 per cent in 2023, and semiconductor sales are expected to fall by 8 per cent or 10 per cent. In addition, driven by the national policy, many semiconductor design companies have emerged in China, and some start-up companies overlap with the existing market entities, resulting in intensified competition in the industry. Due to factors such as continued weak demand in the downstream consumer electronics market and increased competition in the industry, the company's performance was under short-term pressure. In the first half of 2023, the net profit was 21 million yuan, down 38.36% from the same period last year, but Q2 achieved a net profit of 13 million yuan in a single quarter. Month-on-month has improved significantly.

Focus on technical services in market segments, and actively extend to the upper reaches of the industrial chain

The company is an IC authorized distributor specializing in wireless communications, radio frequency and sensor technology, and has a competitive advantage in AIOT smart Internet of things, automotive electronics and other market segments.

The field of wireless connection, radio frequency and sensor technology that the company has worked hard for many years is one of the most promising subdivisions in the IC industry chain. Communication and sensor IC is also the basic link of AIOT networking, which has a continuous and stable market demand.

In addition, the company actively infiltrates into the upper reaches of the IC industry chain, and integrates chip design resources, fab testing services, EDA tools, module assembly packaging, IC system software, etc., and continues to open up new energy vehicle electronics, smart home, and smart wearable markets. Based on wireless communication chips, it integrates radio frequency devices, digital-analog hybrid chips and MEMS sensor technology to develop special chips that meet the needs of market segments. Lay a solid foundation for the long-term development of the company.

Innovative technologies such as edge computing and heterogeneous integration are expected to bring new opportunities for the company.

At present, with the rapid development of AI industry, AIGC has put forward higher requirements for CPU, GPU, AI ASIC and so on. Chip design needs to consider the architecture of multi-process and multi-node, combined with technology, energy efficiency, functional module interconnection and so on to meet a variety of customer needs. At present, the company has cooperated with the National Chuangchuang Center to start the industrial ecological construction of the integration of sense and memory calculation. the two sides plan to use the PZT thin film MEMS production process platform and the PMUT sensor computing integrated chip project to give full play to the technical advantages and industrial status of the National Chuang Chuang Center in the characteristic technology of MEMS sensors and advanced closed testing fields, and to carry out IC custom design and industrial cooperation in the fields of intelligent acoustics, smart home and biological testing.

The company has also signed a strategic cooperation agreement with Strange Moore, using Chiplet heterogeneous stacking process to heterogeneous integrate memory, MEMS sensors, wireless processing chips and other small core particles together to form a sense-memory integrated chip, reflecting the advantages of high yield, low cost and fast delivery of IC process. The emerging intelligent Internet of things (AIOT) uses local interconnection and other communication technologies to connect sensors, storage, computing and terminal devices together to form a network of sensor data acquisition, information exchange and edge computing. Massive equipment networking and intelligent scene applications will provide a sustained huge market demand for edge computing, memory and computing integrated industry, and bring new opportunities for the development of the company.

Profit forecast

It is predicted that the income of the company from 2023 to 2025 is 24.74,30.61 and 3.955 billion yuan respectively, and the EPS is 0.21,0.31 and 0.43 yuan respectively, and the current stock price corresponding to PE is 39, 27 and 19 times respectively. The company's short-term performance is under pressure, but the company is actively extending to the upper reaches of the industrial chain, and looking ahead to innovative technologies such as edge computing and heterogeneous integration, we are optimistic about the company's medium-and long-term development prospects and maintain the "buy" investment rating.

Risk hint

The recovery of downstream demand is not as expected, the progress of new technology is not as expected, and the market competition is intensified.