Incidents:
The company released its 2023 three-quarter report. The company achieved revenue of 15.081 billion yuan (YoY -1.96%), net profit of 368 million yuan (YoY -82.86%), net profit of 368 million yuan (YoY -82.86%), and net profit of 130 million yuan (YoY -89.65%) after deducting non-return net profit of 130 million yuan (YoY -89.65%). In the third quarter alone, the company achieved revenue of 6.223 billion yuan (YoY +44.35%, QoQ +37.58%), net profit of 215 million yuan (YoY +279.61%), net profit of 215 million yuan (YoY +279.61%), and net profit of 2.09 billion yuan (YoY +206.25%).
The performance of the single third quarter increased significantly, and inventory removal continued to be promoted: the company achieved a net interest rate of 3.41% in the single third quarter, up 6.37pcts year on year, and a significant increase in performance in the single third quarter. The main factors were: (1) the increase in sales scale and the gradual optimization of the revenue structure led to a month-on-month improvement in gross margin. The company achieved a gross profit margin of 21.78% in the single third quarter, up 4.47pcts from the previous month; (2) the cost side cost control was positive, and the period expenses were reduced. The company's sales expenses rate for the single third quarter was 1.81%, down 1.19pcts year on year; management expense ratio was 2.40%, year-on-year decrease; There was a decrease of 1.89pcts, and the financial expense ratio was 1.68%, down 1.50pcts from the previous year; (3) The same period of the previous year was affected by the market and was due to large asset impairment losses. The inventory side improved quarter by quarter. At the end of the third quarter, the company's inventory value fell to 7.552 billion yuan, a decrease of 38.88% from the end of the previous year. With the launch of the company's new high-end image sensors and the decline in product costs, the company's product structure and cost structure are expected to continue to improve and optimize, and the overall profitability will increase steadily.
New product research and development results have been remarkable, helping the semiconductor design business to increase revenue: by business, with the gradual recovery of downstream demand and the release of new products, the company's semiconductor design business revenue increased significantly. Revenue in the third quarter alone was 5.446 billion yuan, accounting for 87.52% of revenue; the semiconductor distribution business achieved revenue of 777 million yuan, accounting for 12.48% of revenue.
R&D side: 1) In the CIS field, according to the announcement, the company launched CIS products with different pixel sizes in the first half of the year, such as OV50H for flagship and high-end smartphones; OV02E for high-end laptops, tablets and IoT devices; and OX01E20, a system-level chip (SoC) for automotive panoramic display systems (SVS) and rearview cameras (RVC). 2) In the field of TDDI and OLED, the company has achieved full product coverage in the field of touch display (TDDI). From HD720P to FHD1080P, the display frame rate varies from 60 Hz, 90 Hz, 120 Hz to 144 Hz, and the touch point rate supports 120 Hz to 240 Hz. Through the acquisition of CereBrex Inc., the company further expanded its product layout in display solutions, and launched TED chips with the advantages of lower power consumption and lower cost. 3) In the field of analog ICs, the company launched a new automotive-grade PMIC product ORX1210, which cooperates with CIS products to provide customers with more systematic solutions; it has launched SCR process characteristic protection devices for mobile phones, computers, etc., which can more effectively protect USB ports from transient overvoltages.
In the first half of the year, the company completed the acquisition of Xilite, and the simulation product line was further expanded.
Investment advice:
We expect the company's revenue for 2023-2025 to be 21,022 billion yuan, 27.310 billion yuan, and 31,570 billion yuan respectively, and net profit of 923 million yuan, 2,648 billion yuan, and 4,022 billion yuan respectively, corresponding to EPS of 0.78 yuan, 2.24 yuan, and 3.40 yuan, respectively. Taking into account the prosperity of the semiconductor industry, the company's market position and business development, the company was given 60 times PE in 2024, corresponding to the 12-month target price of 134.4 yuan, maintaining a “buy-A” investment rating.
Risk warning: risk of demand recovery in downstream markets falling short of expectations; risk of new product development falling short of expectations; risk of high customer concentration