Introduction to this report:
The company's 2Q23 performance improved month-on-month, and R&D investment was continuously strengthened; as one of the major power management suppliers in the consumer electronics market, the company is expected to benefit from the return of new domestic mobile phone products and a return to revenue growth.
Key points of investment:
Maintain the “increase in holdings” rating and lower the target price to 60 yuan. The company's analog chip product line continued to expand, while demand recovered smoothly in the first half of the year. The company's EPS forecast for 2023-2025 was lowered to 1.50/2.01/2.69 yuan (the original forecast was 2.37/3.13 yuan for 2023-2024). Considering that the company would benefit from the return of new domestic mobile phones, it was given 40 times PE in 2023, lowered the target price to 60 yuan, and maintained its “increase in holdings” rating.
2Q23 Performance improved month-on-month, and R&D investment was continuously strengthened. The company's 1H23 revenue was 373 million yuan, -20.89% year-on-year; 1H23's net profit was 68 million yuan, or -46.07%, mainly due to the overall downturn in the consumer electronics market. At the same time, affected by high inventory costs and low selling prices, the company's gross margin fell to 41.72%, or -4.06% YoY. 2Q23 had revenue of 195 million yuan, +9.30% month-on-month, net profit of 41 million yuan, +47.45% month-on-month, and second-quarter performance improved month-on-month.
It is one of the major power management suppliers in the consumer electronics market, benefiting from the return of new domestic mobile phones. According to Counterpoint data, sales of Q2 smartphones in China fell 4% year over year. Among them, Apple, Huawei, and Realme achieved positive year-on-year growth. Thanks to the return to normal product launches and the resolution of product shortages, sales of the Huawei Q2 phone increased 58% year over year. With a good brand image and strong offline coverage, as new models continue to be released, Huawei phones are expected to make a strong comeback. With the traditional peak consumer electronics season in the second half of the year, the company's consumer electronics business will benefit from the return of new domestic mobile phone products and return to revenue growth.
catalyst. Launch of new domestic mobile phones; breakthroughs in new products; increase in the share of major customers.
Risk warning. The recovery of consumer electronics fell short of expectations; the introduction of new products fell short of expectations.