3Q23 revenue month-on-month growth of 38%, inventory month-on-month significant decline of 2.28 billion yuan. The company's 3Q23 realized revenue of 6.222 billion yuan (YoY +44.4%, QoQ +37.6%), net profit of 215 million yuan (YoY +279.4%, QoQ loss reduction), net profit of 209 million yuan deducted from non-parent (YoY +206.3%, QoQ loss reduction), gross profit rate recovered to 21.8%(YoY -6.7pct, QoQ +4.5pct). The gradual recovery of downstream demand resonated with the company's new products, and the revenue of semiconductor design business increased significantly to 5.45 billion yuan. As of 3Q23, inventory has dropped significantly to 7.552 billion yuan (YoY-6.56 billion yuan, QoQ-2.28 billion yuan).
Flagship phone CIS released, officially challenging Sony in the high-end market. On October 26, Xiaomi 14 launched with Howell customized Light Hunter 900 image sensor (OV50H) with 1/1.31″ large bottom, 13.5EV acoustic ultra-high dynamic range, single pixel size 1.2μm, fusion can achieve 2.4μm super pixel. According to Xiaomi, the power consumption of the Shadow Hunter 900 is reduced by 42% at the same size, and the performance index and actual imaging effect are significantly better than SONY IMX989. With the launch of new high-end image sensors and the reduction of product costs, the company's product structure and cost structure will continue to be optimized, and the overall profitability will be steadily improved.
The strategic layout of "3+N" continued to deepen, laying the foundation for the long-term growth of platform-based design companies. Based on CIS, touch display and analog solutions, the company incubates new businesses such as MCU, LCOS and SerDes according to its own IP accumulation, customer demand and supply chain collaboration. The deepening of "3+N" layout is expected to lay the foundation for long-term sustainable development. 1-3Q invested 1.56 billion yuan in R & D and launched CIS such as mobile phone OV 50H/50E/OV 02E for six consecutive years, which is expected to promote the upgrading of mobile phone and consumer electronics CIS product structure; Promote the comprehensive layout of automobile CIS ADAS, look around, side view, rear view and cabin application, and the fixed share of domestic and foreign automobile manufacturers is expected to continue to increase;FHD and HD TDDI new products are fully introduced into Tier1 OEM mass production, and the company's display solution product layout is further expanded through the acquisition of Siruibo.
Investment advice: product upgrades stack diversified chip design companies to maintain a "buy" rating.
It is estimated that the company's revenue from 2023 to 2025 will be 218.73 billion yuan, 270.89 billion yuan and 33.043 billion yuan, the net profit attributable to the parent company will be 12.85 billion yuan, 31.94 billion yuan and 4.487 billion yuan, and the EPS will be 1.08 yuan, 2.69 yuan and 3.79 yuan. The current stock price corresponds to 94.6 times, 38.0 times and 27.1 times PE from 2023 to 2025, maintaining the "buy" rating.
Risk tips: demand is lower than expected; chip manufacturing capacity is not as expected; new products are not as expected.