Report summary:
Incident: The company released its 2023 performance forecast on the evening of January 25. In 2023, it is expected to achieve net profit of 85 million yuan, a year-on-year decrease of 86.35%; it is expected to deduct non-net profit of -08 million yuan, putting pressure on the performance in the short term.
Comment: Performance is under pressure in the short term. Global downstream demand for IoT terminals gradually slowed, and downstream demand gradually picked up in the second half of the year. In 2023, the company expects to achieve revenue of 13.837 billion yuan, a year-on-year decrease of 2.76%. The revenue and net profit side are under pressure in the short term, mainly due to the phased slowdown in global downstream demand for the Internet of Things. Downstream demand in the IoT industry gradually picked up in the second half of 2023. The company continued to explore vertical IoT application fields, leading to a recovery in revenue in the fourth quarter, which increased by about 12% over the previous quarter.
The company continues to expand its product strategy layout, and 5G modules, smart modules, LPWA modules, and Wi-Fi modules continue to improve the product matrix. In terms of 5G modules, the company actively grasped the rapid growth opportunities of the 5G FWA market in 2023. As the first in the industry, it released the latest 3GPP R17 industrial grade 5G communication module RG650x, which greatly increased the transmission rate of customer applications. The company launched a cellular-WiFi Smart Link multi-channel connection for PC OEMs and notebook computers to enrich AOAC connection scenarios for notebook computers in the 5G era. In terms of intelligent modules, the company launched a new generation of ultra-high computing power intelligent module SG885G in 2023, with a built-in 48Tops computing power AI computing acceleration processor. In terms of LPWA modules, the company launched the BG950S-GL module with ultra-low power consumption and 5G IoT capabilities based on NTN technology, which is used in various application scenarios such as meters, trackers, and wearable devices.
The company's automotive modules continue to develop and deepen in-depth cooperation with mainstream OEM customers at home and abroad.
In 2023, the company fully grasped the development trends of global automobile electrification, connectivity, and intelligence. The company thoroughly understood and explored the pain points of OEM customer needs, obtained ISO21434 cybersecurity certification, continuously improved vehicle-grade communication modules based on 5G, LTE, C-V2X, etc., and also increased the matrix layout of multiple products such as in-vehicle intelligent modules, WiFi & BT modules, GNSS modules, UWB modules and vehicle antennas, and received targeted projects from leading car companies in Europe, North America, Japan, India and China.
Profit forecast: As a leading global IoT module company, we are optimistic that the company will continue to consolidate and enhance its competitive position in the industry with product technology advantages and high-quality customer resources in the automotive, 5G and intelligent module fields, and continue to expand internationally through the Internet of Vehicles, Smart Modules and Pan-IoT businesses. The company's revenue for 2023-2025 is estimated to be 139.59/183.9 1/2 2,961 billion yuan; net profit attributable to mother is 0.88/6.27/915 million yuan; and EPS 0.33/2.37/3.46 yuan/share, maintaining a “buy” rating.
Risk warning: Competition in the industry is intensifying, and the development of automotive modules and pan-IoT businesses falls short of expectations.