3Q23 performance is slightly lower than we expected.
The company announced 3Q23 results: 1-3Q23 achieved operating income of 593 million yuan, down 25.65% from the same period last year; net profit was-138 million yuan, down 323.71% from the same period last year. 3Q23 achieved operating income of 188 million yuan, down 13.06% from the previous month; its net profit was-57 million yuan, and its loss increased by 96.06% compared with the previous month; the overall profit was slightly lower than we expected, mainly affected by depressed demand in the terminal market.
The rate of R & D expenditure increased compared with the same period last year, and the gross profit margin decreased compared with the same period last year. The company's 1-3Q23 sales / management / R & D / financial expense rates were 3.59%, 7.84%, 52.68%, 0.38%, respectively, with year-on-year changes + 1.58ppt, 23.13ppt, 1.35ppt; in terms of profitability, the gross profit margin of 1-3Q23 was 36.29%, a decrease of 2.59ppt3Q23 gross profit margin of 35.86%, and an increase of 0.08ppt.
Trend of development
Terminal market demand continues to be depressed, new products are still in the introduction period, 1-3Q23 company operating income declined compared with the same period last year. In the first three quarters of 2023, the global semiconductor terminal market demand remained in the doldrums, the company's mature product shipments declined, and many new products were still in the introduction period, resulting in a decrease in operating revenue compared with the same period last year. At the same time, the company's 1-3Q23 R & D investment was 312 million yuan, an increase of 32.51% over the same period last year, superimposing the impact of declining revenue, putting pressure on the company's net profit.
Continuously high R & D investment, waiting for the release of new products. At present, the company is in the research project in addition to FPGA chip research and development, FPSoC chip research and development, but also includes car gauge-level chip research and development, and is conducting user introduction and more FPGA chip development to meet the requirements of vehicle specifications, to further meet the rapid growth of automotive electronic systems in the use of FPGA to achieve logic control, interface conversion, hardware upgrade and other functions. In addition, the company is actively developing FPGA-specific EDA software and FPSoC-specific software.
Profit forecast and valuation
Considering that it still takes time for the company to continue its high-intensity R & D investment and downstream demand to pick up, we cut the 24-year operating income of 23 Universe by 24.8% and 25.6% to 907 million yuan / 1.496 billion yuan, and reduced the net profit from-147.5% and-32.6% to-15 million yuan / 87 million yuan. The company's current stock price corresponds to a price-to-sales ratio of 10.86x in 2024. Considering the company's leading position in the FPGA field, we maintain an outperforming industry rating. We cut the target price by 8.3% to 55 yuan, and the company's target price corresponds to a market-to-sales ratio of 14.74x in 2024, which is 35.7% higher than the current stock price.
Risk
The risk that the promotion of new products is not as expected; the risk that the market competition is fierce and the market expansion is not as expected; the risk of technology research and development failure.