The company announced its 2023 performance forecast. It is expected to achieve annual revenue of 13.837 billion yuan, a year-on-year decrease of 2.76%; net profit of 85 million yuan, a year-on-year decrease of 86.35%; and expected to achieve net profit of 8 million yuan after deduction, a year-on-year decrease of 101.66%.
Q4 Revenue and profit improved steadily month-on-month, and overall demand was still under pressure. According to the performance forecast, Q4 is expected to achieve revenue of 3.87 billion yuan in a single quarter, down 5.47% year on year and up 12.02% month on month; net profit to mother is expected to be about 103 million yuan, down 45% year on year and up 5.83% month on month. Demand in the company's downstream IoT industry gradually picked up, and the company continued to develop new business scenarios, driving the company's revenue to rise sequentially in the fourth quarter. New products and new businesses, including automotive modules, 5G modules, smart modules, ODM, short range modules, antennas, GNSS modules, etc., all showed a good growth trend in 2023.
The company's ODM business provides PCBA solutions for leading customers, involving industries such as PDA, POS payments, FWA, two-wheel intelligent travel, BMS, etc. The company's profitability improved in the second half of 2023, with 23Q3 gross margin rising from 17.5% in 23Q2 to 19.9%.
Cost reduction and efficiency have continued, and profit losses have been effectively controlled. The company is reducing costs by cutting management salaries, slowing down recruitment, and increasing unit personnel output. The profit margin is expected to gradually rise in the future. Currently, the net interest rate for 2023Q4 is estimated to be about 2.7%.
Looking forward to the future, applications in the IoT field will continue to emerge, and technology will continue to be upgraded and iterated. Relying on its high cost performance ratio, 5G REDCap technology is expected to accelerate implementation and promotion. AI application scenarios continue to be implemented, and the decline and deployment of large models at the edge side increases the demand for edge intelligent computing power, driving the IoT module industry to evolve from digital transmission modules with a single functional dimension to intelligent modules, thus further sharing the dividends brought by AI.
Innovation in new technology is expected to accelerate the accelerated iterative upgrading of terminals, and the rise of new hardware terminals such as smart cars, AI PCs, and AI PINs, leading to a recovery in overall demand and an increase in the added value of IoT modules.
Profit forecast: The company's net profit for 2024-2025 is expected to be 61/80 million yuan, corresponding to PE 18/14 times, respectively, maintaining the “increase in holdings” rating.
Risk warning: demand for optical modules falls short of expectations; market competition deteriorates; optical module prices have dropped sharply.