Performance preview
4Q23 performance forecast: Revenue is in line with our expectations, and the performance is slightly lower than our expectations Zhuo Shengwei announced the 2023 performance forecast: The company expects to achieve revenue of 4.394 billion yuan in 2023, an increase of 19.5% over the previous year, and is expected to achieve net profit of 1.08 to 1.17 billion yuan in 2023, corresponding to a year-on-year growth range of 1.1% to 9.15%.
Split to a single quarter of 4Q23: The company is expected to achieve revenue of 1,320 million yuan in 4Q23, a year-on-year increase of 100% /a 6% month-on-month decline. The company expects to achieve net profit of 261-348 million yuan in 4Q23, corresponding to a year-on-year growth range of 210% to 313% /corresponding to a month-on-month decline of -42% to -23%.
We believe that the company's 4Q23 revenue forecast for the single quarter is in line with our expectations, and the performance is slightly lower than our expectations: 1) On the revenue side, the company's performance is in line with the regular consumer electronics delivery pace. Considering the clear signal of the bottom of the 3Q23 industry's inventory level, and the industry benefiting from holiday consumption incentives and the centralized inventory replenishment needs of some Android customers, 3Q23 was the company's highest revenue point in a single quarter throughout the year. The slight decline in 4Q23 revenue from month to month reflects the industry's regular pace of goods collection; 2) on the profit side, 4Q23 performance declined month-on-month or focused on investment brought about by the modular layout. Considering that the company continues to promote the high-end RF modular layout and the construction of the Xinzhuo factory, we speculate that the company's fee rate for the fourth quarter may increase compared to the third quarter to reflect cost-side fluctuations such as equity incentives and employee remuneration bonuses at the end of the year. We continue to be optimistic about the implementation of the company's platform-based strategy.
Key points of interest
Focus on self-built filter production lines, and the modular layout is progressing steadily. Looking back at 2023, as of the interim report, the company announced that it had integrated more than 160 million self-produced filters in products such as DiFeM, L-diFeM, and GPS modules, and successfully mass-produced new complex module products such as L-PAMIF and L-FemID in 2023.
Looking ahead to 2024, we are optimistic that the company will continue to expand its market share in mass-produced new products such as L-pamif and L-femid, while continuing to promote in-depth research and development of highly integrated L-pamid products in the future. We recommend that investors closely follow the development progress of new module products.
Profit forecasting and valuation
Zhuo Shengwei is currently trading at 37.3 times the 2024 price-earnings ratio and 27.2 times the 2025 price-earnings ratio. Considering that the RF industry has gradually entered a normal shipping rhythm after undergoing 3Q23 inventory repair and that the company continues to promote the construction of RF platform-based enterprises, Xinzhuo's R&D investment is expected to increase slightly. We have carefully lowered the company's 2023/2024 net profit forecast of 17%/9% to mother to 11.42/17.01 billion yuan, while introducing a net profit forecast of 2.34 billion yuan for 2025. We maintain an industry performance rating. Considering that Zhuo Shengwei is still one of the leading domestic RF companies, and the long-term platform strategy continues to be implemented steadily, we maintain a target price of 150.0 yuan, which corresponds to 46.9 times the price-earnings ratio of 2024/34.2 times the price-earnings ratio of 2025, with 25.8% upward space compared to the current stock price.
risks
Demand for smartphone terminals fell short of expectations; gross margin declined further; introduction of new products fell short of expectations.