[Event]: The company released its 2023 three-quarter report, achieving revenue of 15.081 billion yuan, -1.96% year-on-year; net profit of 368 million yuan, -82.86% year-on-year.
New products boosted, and revenue improved significantly from month to month: With the gradual recovery of downstream demand, with the help of the company's new products, the company's semiconductor design business revenue increased significantly. 2023Q3 achieved revenue of 5.446 billion yuan, accounting for 87.52% of operating income. 2023Q3 achieved overall revenue of 6.223 billion yuan, an increase of 44.35% over the previous year and an increase of 37.58% over the previous year.
The volume of new products drives a gradual recovery in profitability: 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 continued to improve and optimize, and the average gross margin level improved markedly month-on-month, from 17.30% in 2023Q2 to 21.78% in 2023Q3, an improvement of 4.48 percentage points over the previous month. The company continued to increase R&D investment. 2023Q3 reached 624 million yuan, +1.98% year-on-year and +32.12% month-on-month. However, due to good control of other expenses, 2023Q3 achieved a net profit margin of 3.41%; net profit was 215 million yuan, an increase of 335 million yuan over the previous year, and turned a loss into a profit by 261 million yuan over the previous year. Considering that the company had many non-recurring profits and losses in 2022, such as government subsidies, etc., it achieved net profit attributable to shareholders of listed companies deducting non-recurring profits and losses of 209 million yuan, an increase of 405 million yuan over the previous year and an increase of 310 million yuan over the previous year. The improvement trend is obvious.
Inventory removal is obvious, and financial quality has improved dramatically: the company is actively promoting inventory removal. As of 2023Q3, the company's inventory value has dropped to 7.552 billion yuan, a decrease of 38.88% from 12.356 billion yuan at the end of 2022, and the improvement in inventory is quite obvious. The 2023H2 is the peak sales season for traditional new machines. The company is expected to continue to seize market share with its excellent product performance and high cost performance ratio, and continue to optimize inventory. For example, the Xiaomi 14 released on October 27 has a single CIS 1.2 μm pixel four in one to reach the 2.4 μm large pixel standard; the single frame can reach the dynamic range of 13.5 EV, which is 8 times higher than the IMX989, and the power consumption of the same size is 42% lower.
Investment suggestions: The company is expected to achieve revenue of 215.14/259.60/313.323 billion yuan and net profit of 9.10/25.71/40,000 billion yuan in 2023-2025, corresponding to PE 133.38/47.19/30.33 X, maintaining the “increase in holdings” rating.
Risk warning: downstream demand falls short of expectations; progress in new product development falls short of expectations; industry competition increases risks.