Incident: The company released its semi-annual report for 2023, achieving revenue of 1,796 million yuan, an increase of 5.52% year on year, net profit of 449 million yuan, a year-on-year decrease of 15.32%, net profit of non-return net profit of 415 million yuan, a year-on-year decrease of 20.03%. The gross margin was 67.10%, an increase of 2.1 pct over the previous year. In a single quarter, 23Q2 achieved revenue of 987 million yuan, a year-on-year increase of 6.51%, an increase of 22% over the previous month, and 23Q2 achieved net profit of 261 million yuan, an increase of 38.83% over the previous quarter.
Performance has improved month-on-month, and there is strong growth momentum for highly reliable FPGA products. In the first half of 2023, the company's non-volatile memory, FPGA and other chips, security and identification chips, and smart meter chips achieved revenue of 5.88, 5.86, 4.10 million yuan, and 113 million yuan respectively, compared with +21%, +55%, -11%, and -59%. Among them, FPGA business companies have obvious competitive advantages, and have achieved coverage in many downstream fields. Currently, they can provide 10 million gate level and 100 million gate level FPGAs and PSoCs, and are also promoting a new generation of FPGAs based on the 1xnm FinFET advanced process. Non-volatile memory benefits from timely product structure adjustments to maintain high growth.
As security and identification chips were introduced one after another, the decline gradually narrowed. Smart meter chips have declined a lot due to the bidding cycle. Overall, as prices for storage products such as NOR gradually bottomed out, the company gradually expanded to automotive-regulated MCUs, and improved month-on-month, so the company's future development is worth looking forward to.
The product structure is gradually optimized, and R&D investment drives growth. The company's gross margin for the first half of 2023 was 67.10%, mainly due to the gradual increase in the share of highly reliable and high-margin products. In the first half of the year, the company invested 588 million yuan in R&D, an increase of 47.54% over the previous year. At the same time, the company plans to issue convertible bonds for the development and industrialization of next-generation FPGA platforms, intelligent reconfigurable SoC platforms, new process platform memory, new high-end security controllers, and passive IoT basic chips.
Profit forecast: We predict that the company's operating income for 23-25 will be 39.40, 4793, and 5.845 billion yuan, net profit for the parent to be 11.74, 15.27, and 1,896 billion yuan, corresponding EPS of 1.44, 1.87, and 2.32 yuan, corresponding to the current stock price of 38.1, 29.3, and 23.6 times PE. As an established IC design enterprise in China, the company has outstanding advantages in various product lines and continues to benefit from domestic replacement acceleration opportunities. At the same time, it has gained great advantages in the FPGA chip field and maintained its “increase in holdings” rating.
Risk warning: Downstream demand falls short of expectations, market competition intensifies, and new product development falls short of expectations.