Event: The company issued a report for the third quarter of 2023. The first three quarters of 2023 achieved revenue of 615 million yuan, a year-on-year decrease of 12.83%, and net profit of 143 million yuan, a year-on-year decrease of 32.64%.
Key points of investment
Performance has fluctuated due to product changes, and R&D investment has continued to increase: the first three quarters of 2023 achieved revenue of 615 million yuan, a year-on-year decrease of 12.83%, and 2023Q3 achieved revenue of 180 million yuan, a year-on-year decrease of 12.50%, mainly due to the gradual shift of Beidou terminal products from the second generation to the third generation, which was affected by the slowdown in delivery in this phase due to testing and inspection. The first three quarters of 2023 achieved net profit of 143 million yuan, a year-on-year decrease of 32.64%, and 2023Q3 achieved net profit of 34 million yuan, a year-on-year decrease of 32.58%, mainly due to the large decline in revenue affected by testing and inspection points and the increase in expenses during the period.
R&D expenses for the first three quarters of 2023 were 91 million yuan, an increase of 13.63% over the previous year, mainly due to the company's increased R&D investment in the current period and the increase in R&D labor costs.
The latest disclosure of the controlling shareholder's current situation is that the company's directors plan to increase their shareholding: Chengdu Guoteng Electronics Group Co., Ltd., the largest controlling shareholder, has filed numerous lawsuits due to shareholder differences, and its holding is about 29.38%. At present, the second instance ruling on the board of directors resolution and shareholders' meeting resolution dispute has been issued, and the company's dissolution dispute is still in the second instance trial stage. Currently, it has not had a significant impact on the company's current operations, but there is still some uncertainty about the future. Meanwhile, on August 23, the chairman and directors of the company planned to increase their holdings of the company's shares by a total amount of 10-20 million yuan within 6 months based on their confidence in the company's future stable development and long-term investment value, showing that the two are optimistic about the future operation of the company.
The steady growth of integrated circuits ensures performance, and the active implementation of Beidou Navigation benefits the future: Driven by three factors: the acceleration of new infrastructure, the increase in the informatization rate, and the increase in the localization rate, the integrated circuit industry is still relatively prosperous, and the industry's technical barriers are high, and the first-mover advantage for enterprises is obvious. The company is actively promoting technical verification and product implementation of the third generation of Beidou products. It not only has core chip technology advantages and R&D and service capabilities for the entire Beidou industry chain, but also has Beidou terminal-level civil operation service qualifications, successfully building the development of the entire Beidou satellite navigation “component-terminal-system application” industry chain, further promoting the company's future development.
Profit forecast and investment rating: The company's performance is in line with expectations. Considering the rapid increase in digital radar penetration rate and the company's central position in the industry, we adjusted our previous forecasts. The company's net profit for 2023-2025 is expected to be 2.74 (-2.28) /4.21 (-2.84) /546 million yuan, corresponding to PE 38/24/19 times, respectively, maintaining a “buy” rating.
Risk warning: 1) risk of product development failure; 2) risk of raw material price increase; 3) risk of corporate shareholder litigation.