occurrences
Changxin Technology released the operating data report for the first three quarters of 2023: the company achieved revenue of 6.296 billion yuan in the first three quarters of 2023, an increase of 21.59% over the previous year; realized net profit of 306 million yuan, a year-on-year decrease of 47.60%. According to calculations, the company achieved revenue of 2,921 billion yuan in the single quarter of 2023, an increase of 53.6% over the previous quarter, and realized net profit of 86 million yuan, a decrease of 25.6% over the previous quarter.
Key points of investment
Demand for consumer electronics is weak, and company profits are under pressure in the short term
In Q3 of 2023, the company achieved revenue of 2,921 billion yuan, a year-on-year increase of 48.66%; gross profit margin of 10.17%, a year-on-year decrease of 6.21 pct, mainly due to weak consumer electronics demand. The company's expenses side fluctuated greatly. The sales/management/R&D/finance expense ratio for the third quarter was 0.94%/2.00%/2.72%/0.58%, with year-on-year changes of -0.56/+0.28/ -1.99/+2.57 pct. Among them, the decrease in sales expenses was mainly due to a decrease in export expenses and reduction in estimated liabilities. The increase in financial expenses was mainly due to increased interest expenses and a decrease in exchange earnings. Affected by the decline in gross margin, the company's net profit for the third quarter was 86 million yuan, a year-on-year decrease of 60.67%.
The automotive electronics business is diverse, covering many downstream customers
The company is deeply involved in the automotive electronics industry. Its business covers in-vehicle sensors, in-car covers, integrated automotive touch display modules, etc. Customers include Japanese, European, and American brand manufacturers, covering more than 70% of global vehicle brands. The company is a supplier of many models of Cyrus S series, Wenjie M series, and Chery (Jetu X70, Arize 8, etc.), and provides central control screen assemblies for cover, touch, backlight assembly, etc.
VR and wearable modules are at the top of the industry, and are expected to drive performance growth. The company's VR business layout is early. It develops automatic visual inspection technology for AOI cameras on its own, provides Meta with the latest VR Quest 3 display modules, and provides VR headsets for domestic VR giants. Furthermore, the company has become an industry leader in the field of wearable modules and is the exclusive supplier of Little Genius Z series, Huawei GT series, and Xiaomi flagship watches. With the rise in industry prosperity and the development of the company's new products, it is expected to drive performance growth.
Profit forecasting
It is predicted that the company's revenue for 2023-2025 will be 76.16, 85.68, and 9.682 billion yuan, EPS of 0.25, 0.31, and 0.38 yuan respectively, and the current stock price corresponding to PE is 26, 21, and 17 times, respectively. We are optimistic about the company's business layout in the fields of automotive electronics, VR, and wearable modules, and give it an investment rating of “increased holdings”.
Risk warning
Risk of demand fluctuations in downstream markets, risk of increased market competition, etc.