Event: The company released its report for the third quarter of 2023. The first three quarters of 2023 achieved revenue of 596 million yuan, -18.72% year-on-year; net profit of the mother was 75 million yuan, -57.93% year-on-year. 2023Q3 achieved revenue of 210 million yuan, +1.24% year-on-year; net profit of 28.117 million yuan, or -34.73% year-on-year.
Comment: In the first three quarters of 2023, in the face of increased competition in the crystal oscillator industry, the company optimized product structure, enhanced product performance, enhanced competitiveness, and increased gross margin in 23Q3. (1) The company's product structure has been further optimized, product costs have been further reduced, and the gross margin of the company's products is expected to maintain a steady increase; (2) the company is steadily advancing the development and category expansion of new clock products in new industries and application fields to increase the development of emerging markets such as industrial and automotive electronics; (3) downstream 5G, automotive electronics and other fields drive strong demand in the crystal oscillator industry, and accelerated domestic substitution in the middle and high-end, and leading crystal oscillators continue to benefit.
1. In Q3 of 2023, the company's revenue increased year-on-year, and gross margin increased month-on-month.
In Q3 2023, the company's revenue increased year on year, net profit increased month-on-month, and gross margin increased month-on-month. 2023Q3 achieved revenue of 210 million yuan, +1.24% year-on-year; net profit of 28.117 million yuan, -34.73% year-on-year, +0.54%; gross profit margin 25.64%, +0.98 pct month-on-month. The company has optimized the production line process and optimized material costs. Product costs have been further reduced, and the gross margin of the company's products is expected to maintain a steady increase.
2. Continue to refine technology research and development, and increase market development in industrial and automotive electronics.
It has the ability to independently design miniature tuning fork chips with high base frequencies and mainstream size, and has gradually improved yield to be consistent with international peers. (1) Promote the development and industrialization of high base frequency lithography chips, achieve trial production and mass production of ultra-high frequency and ultra-small size products such as 76.8 MHz and 285 MHz, and have high base frequency processing capability of 300 MHz; (2) realize the development and industrialization of high-performance chips such as automotive grade (high safety level), RTC (high accuracy, reliability, high stability) chips, and industrial grade (high temperature requirements); (3) Tuning fork XO series, TCXO series products, and OCXO series products, RTC modules, etc. Increased rate; (4) automotive-grade high frequency The characteristics of the series, OSC Zhong Zhen, and other series products have been optimized and the yield has been improved, corresponding to the reliability and various index parameter requirements of vehicle specification products.
The lithography process has been further optimized and upgraded. (1) The company is guided by MEMS lithography technology to achieve completely independent intellectual property rights for key core equipment and improve the yield and qualification rate of lithography chips. (2) In the first three quarters of 2023, the company focused on technological innovation capabilities, with R&D expenses of RMB 30.166 million, accounting for 5.07% of revenue.
The number of customers and penetration rate have been rising steadily, and the customer advantage is remarkable. Focusing on the big customer strategy, the company continues to promote the application of high-end products such as RTC clock modules and high-frequency differential oscillators for high-end active products in industrial regulations, vehicle regulations, etc. At present, it has passed the verification and review of some of the world's high-quality Tier 1 and Tier 2 manufacturers, serving more than 10 OEMs and mainframe supporting enterprises.
3. Emerging applications drive industry demand, domestic substitution is accelerating, and Jingzhen leaders are expected to continue to benefit.
(1) Increased policies and emerging applications drive the development of the quartz crystal oscillator industry. Downstream applications such as 5G and automotive electronics are booming, and demand for miniaturized and high-frequency products is strong, which is highly optimistic about industry prospects; (2) As a leading enterprise in the industry, the company undertakes market demand shifts and promotes performance growth with excellent customer accumulation and technical advantages. (3) The company's leading trend is more obvious. With technology accumulation and a full range of products and quality services, it is expected to increase market share and share.
4. Investment advice: I am optimistic that in the context of strong demand for emerging applications and accelerated localization, the company will gradually release high-end product production capacity, continue to optimize the product structure, and enter a period of rapid growth. Considering factors such as a slowdown in terminal demand in 2023 and a decline in product unit prices, etc., the company's 2023/2024 net profit forecast was adjusted to 1,03/201 million yuan (original value was 4.78/610 million yuan), and the net profit forecast for 2025 was increased to 330 million yuan, maintaining the “buy” rating.
Risk warning: corporate governance risks; downstream demand falls short of expectations; changes in traditional industries, etc.