Matters:
The company announced its 2023 performance forecast. The company expects to achieve operating income of 4.394 billion yuan in 2023, an increase of about 19.50% over the same period last year. Net profit attributable to shareholders of listed companies is expected to increase 1.01% to 9.15% over the same period last year.
Ping An's point of view:
Revenue improved year-on-year for the full year of 2023, and profit declined month-on-month in 23Q4: In fiscal 2023, although the slowdown in global economic growth in the first half of the year weakened demand in the company's main downstream smartphone market, the second half of the year benefited from holiday consumption stimulation and the gradual optimization of customer inventory structures, and downstream customer demand increased. According to the company's preliminary accounting, the company expects to achieve operating income of 4.394 billion yuan in 2023, an increase of about 19.50% over the same period last year. Net profit attributable to shareholders of listed companies is expected to increase 1.01% to 9.15% (median value of 5.08%) over the same period last year, and the corresponding profit value is about 1,080-1,167 billion yuan (median value of 1,124 million yuan). Looking at the fourth quarter of '23 alone, the company is expected to achieve revenue of 1.32 billion yuan, down 6.32% from month to month; net profit to mother is 305 million yuan (calculated as the median estimated profit for the whole year), down 48.20% from month to month.
Focus on the self-built filter production line business and deepen the market coverage of RF filter module products: Throughout 2023, the company will focus on self-built filter production lines. On the basis of promoting orderly large-scale mass production, the company will accelerate the iterative upgrading of products, respond to the diverse needs of customers, and continuously deepen the market coverage of RF filter module products. The company has a full product line from discrete devices to RF modules, including LNA, SW, LNA BANK, L-FEM, DiFEM, L-diFEM, L-PAMIF, and WiFi FEM. The company's self-built filter resource platform helps build comprehensive advantages in process, quality, performance, supply, cost, and differentiation of filter-related products.
Investment advice: The company is a leading domestic RF front-end chip with a full product line from discrete devices to RF modules. The company's track is in the field of RF front-end, and downstream applications are in the field of mobile terminals represented by smartphones, which have remarkable semiconductor cycle characteristics. Based on the company's 23-year performance forecast and judgment on industry trends, we adjusted the company's net profit forecasts for 2023-2025 to be 11.07 billion yuan, 16.11, and 2,584 billion yuan (previous values were 1,490, 21.43, and 3.123 billion yuan, respectively). EPS for 2023-2025 was 2.07 yuan, 3.02 yuan and 4.84 yuan, respectively, and PE corresponding to the closing price on January 19 was 57.5, 39.5, and 24.6 times, respectively. The company has built its own filter production line. As products such as DiFeM, LDiFem, and GPS modules with integrated in-house filters continue to be released, the cost advantage is obvious. At the same time, the company's high-end product L-pamid is expected to be launched on the market in the first half of 2024, which will bring good market reputation and performance growth to the company. We are optimistic about the company's future development and maintain a “recommended” rating.
Risk warning: (1) Risk of declining smartphone sales. The company's performance is largely dependent on smartphone sales. If mobile phone sales continue to decline, the company's expansion in other fields falls short of expectations, which may adversely affect the company's operations. (2) Risk of loss of key technical personnel. In the future, if the company is unable to introduce top filter design talents from abroad due to international restrictions, or is insufficient to match the competitive salary level in the same industry, it may seriously lead to the loss of technical personnel, especially filter design talents, which will adversely affect the company's production and operation. (3) Risk of failure in high-end filter development. Currently, the company's filter products are mainly low-end receiver SAW filters. If the company fails to develop transmission filters and high-end BAW filters in the future, it will adversely affect the company.