Jinghe Integrated announced its 2023 three-quarter report. The company's revenue for the third quarter of 2023 increased month-on-month in terms of revenue and profit: the company achieved operating income of 2,047 billion yuan in the third quarter of 2023, a decrease of 18.14% over the same period in 2022, and an increase of 8.88% over the same period in 2023 of 1,880 billion yuan in Q2. Q3 in 2023 achieved net profit of 75.6 million yuan, down 89.89% from the same period in 2022. Net profit after deduction was 21.55 million yuan, down 96.99% from the same period in 2022. The company achieved a total operating income of 5.017 billion yuan in the first three quarters of 2023, down 40.93% from the same period in 2022; net profit for the first three quarters of 2023 was 31.99 million yuan, down 99.05% year on year, and net profit after deducting net profit of 125 million yuan was -125 million yuan, down 103.79% year on year. The decline in the company's operating income is mainly due to the decline in the prosperity of the semiconductor industry and the slowdown in overall market demand. The decline in the company's net profit is mainly due to (1) the year-on-year decline in the company's operating income, and the high fixed costs of the company such as depreciation and amortization; (2) the decrease in exchange rate income compared to the same period last year due to exchange rate changes. (3) The company continues to increase R&D investment, and R&D expenses have increased compared to the same period in 2022.
The company's main revenue comes from 150nm to 90nm technology nodes. In the future, with the gradual release of 55nm production capacity, the share of 55nm and above process products will increase until the first half of 2023. The company's 90nm and below processes account for 95.17% of the company's overall revenue. Among them, the 90nm process is the company's core main revenue, reaching 1,477 million yuan accounting for 49.92%, 110nm process revenue of 936 million yuan accounting for 31.65%, and 150nm process revenue for 402 million yuan, accounting for 13.60%. The company's more advanced 55nm process revenue was 143 million yuan, accounting for 4.83%.
Based on the increasing requirements of the company's foundry customers for issuer technology iteration and product diversification, the company will increase investment in R&D and will further invest in advanced process research and development projects through fund-raising companies, and continue to diversify process platforms. The company's R&D expenses are increasing year by year. It is mainly used for the development of more advanced processes such as 55nm, 40nm, and 28nm, and the development of other product technology platforms such as CIS, MCU, and PMIC. This includes the development of projects such as 55nm rear-illuminated CMOS image sensor chip process platform, 40nmmCU process platform, 40nm logic chip process platform, 28nm logic and OLED chip process platform.
As process nodes are further improved and the variety of technology platforms has increased.
Display panels are an important component for information display. DDIC is the core chip for display panels. The company's main foundry product is DDIC. At the same time, it also expands the integration of process platforms such as CIS, MCU, and PMIC, and is mainly engaged in 12-inch foundry business, providing customers with Foundry services for DDIC and other process platforms. The company's main application areas of foundry service products are mainly panel display driver chips. The company's 150nm-90nm LCD display driver chip technology was improved and optimized on the basis of Lijing Technology's technology transformation technology, and was formed after innovation and upgrading.
The company has a wide customer base, covering international first-tier customers, and has been approved by many well-known chip design companies and terminal product companies at home and abroad. The company signed relevant contract orders with Qijing Optoelectronics and Yili Technology after confirming the applicability of the technology transfer platform at the beginning of construction in 2017, after confirming the applicability of the technology transfer platform. Also, in March 2017, Lianyong Technology was selected as the first customer for the 150nm process platform. Later, the company established long-term and stable cooperative relationships with domestic first-tier manufacturers such as Stevie, Jichuang Beifang, Ziguang Zhanrui, Easyway, and Gewalt. At the same time, the company maximizes the application of localized equipment and materials in terms of domestically produced equipment and materials to promote domestic substitution tasks in mainland China's supply chain.
Investment advice
We expect the company's revenue from 2023-2025 to be 7.359 billion /10.999 billion /16.167 billion yuan, respectively. Net profit of net income was 316 million yuan/1,316 million/2,495 million yuan, respectively, and EPS per share was 0.16 yuan/0.66 yuan/1.24 yuan. The corresponding PE is 108/26/13 times, respectively.
Maintain an “increase in holdings” rating.
Risk warning
Demand for consumer electronics is weak, market competition is intensifying, and technology iteration falls short of expectations