Incident: The company announced its 2023 performance forecast. In 2023, the company expects to achieve net profit of 2080 to -16 million yuan, net profit of non-return to mother of 650 to 50 million yuan.
2023Q4 losses narrowed significantly in a single quarter. On a median basis, 2023Q4 achieved net profit to mother in a single quarter of -0.4 billion yuan, or -247.12% year-on-month, with a month-on-month loss narrowing of 0.12 billion yuan; net profit without return to mother of -0.18 million yuan, an increase of 12 million yuan year-on-year losses, and a month-on-month loss narrowing of 0.04 billion yuan. The company's losses narrowed significantly in the 23Q4 quarter. We believe the main reason was the recovery in the company's downstream demand, compounded by product structure optimization.
R&D investment continues to grow rapidly, building the foundation for long-term competitiveness. In order to meet the needs of the company's future product layout and business expansion, the company continues to increase the introduction of high-end talents and R&D investment. In 2023, R&D investment accounted for about 30% of revenue, and the R&D cost rate increased by about 8 pcts over the same period last year. The company is committed to research and development, and new products are continuously launched to build a stable foundation for long-term development.
Core technology continues to break through, and product coverage continues to expand. According to the company's semi-annual report, 23H1 added 6 core technologies: 1) DC-DC low EMI and low noise technology; 2) transmission voltage slew rate amplification technology; 3) ultra-high PSRR technology; 4) high voltage half-bridge drive technology; 5) reverse protection technology for motor drive power supplies; 6) DC brushless motor speed hardware closed-loop control technology. The new technology covers major product areas such as power supplies and signal chains, and is expected to help the company expand its product portfolio steadily. As of 23H1, the company's R&D team had a total of 244 people, more than 73% of the total number of people in the company, including 90 people with a master's degree or above, forming a good R&D team. Currently, the company can provide power management chip solutions for various terminal products such as smart meters, BLDC cooling motors, electric bicycles, security monitoring, household refrigerators/air conditioners/washing machines, etc., covering various downstream fields. In the future, as the company continues to launch new products, the company's product coverage is expected to continue to expand, and the room for growth is expected to open up further.
The bottom buyback shows confidence in long-term development. On August 18, 2023, the company announced that the chairman of the company, Mr. Xie Pengcun, proposed to buy back the company's shares at a price of no more than 78.00 yuan/share. The total repurchase capital was not less than RMB 42 million and not more than RMB 84 million. The source of funding was overraised from the company's initial public offering of shares. The repurchase of shares at the bottom of the company was not only based on a reasonable judgment on the company's value, but also demonstrated the company's confidence in long-term sustainable development. As of December 31, 2023, the company has repurchased a total of 912,200 shares, and the total amount of capital disbursed is 42.1819 million yuan.
Investment advice: We expect the company's net profit to be -0.18/0.25/52 billion yuan in 2023/2024/2025, respectively, corresponding to 2024/2025 PE 77.49/37.67 times, respectively, to maintain the “increase” rating.
Risk warning: New product development falls short of expectations; downstream demand falls short of expectations; industry competition intensifies.