Description of the event
On October 26, 2023, the company released the “2023 Third Quarter Report”. It was disclosed that the company achieved revenue of 170 million yuan in the first three quarters, an increase of 14.30% over the previous year. Net profit was 40 million yuan, a year-on-year decrease of 44.07%.
Multi-faceted investment affects profit
In the first three quarters of 2023, the company focused on talent accumulation, technological innovation, and product iteration, and continued to invest resources in R&D, market development, supply chain system, quality management, talent construction, and office environment. The company's sales expenses, management expenses, and R&D expenses increased dramatically, and profits declined year-on-year.
The iterative upgrade of new projects will bring new market space to high-performance integrated circuit products The company released the “Zhejiang Zhenlei Technology Co., Ltd. September 4, 2023 Investor Relations Record Form” on September 5, 2023, disclosing that the company will focus on its main business in the future and vigorously develop a product line focusing on RF transceiver chips, high-speed and high-precision ADC/DAC chips, power management chips, microsystems and modules. The company is a second-level electronic component supplier with excellent product performance, and plays a fundamental supporting role in various projects. It is the cornerstone of customer product informatization and intelligence. As national construction progresses in an orderly manner, the iterative upgrading of new projects will bring new market space to high-performance integrated circuit products, and the special industry will also enter a continuous growth cycle. 2023 is the mid-term of the “14th Five-Year Plan”. Downstream customers have adjusted their needs appropriately. The company will continue to focus on the development of its core business to meet the changing needs of the industry and strive to achieve definitive revenue growth this year.
Investment advice
According to the financial report, we adjusted our profit forecast. The company's net profit for 2023-2025 is estimated to be 120 million yuan, 1.63 million yuan, and 224 million yuan respectively (previous values were 1.45, 1.98 million, and 274 million yuan), with year-on-year growth rates of 11.2%, 36.2%, and 37.6%. Corresponding PE is 71.37, 52.42, and 38.09 times, respectively. Maintain a “buy” rating.
Risk warning
R&D fell short of expectations, downstream demand fell short of expectations, and project construction fell short of expectations.