occurrences
Juchen Co., Ltd. announced the company's 2023 performance forecast on January 27. The company's net profit for 2023 is expected to be 95-103 million yuan, a year-on-year decrease of 73.15% to 70.89%; deducted non-net profit is estimated to be 85,000-93 million yuan, a year-on-year decrease of 78.36%-76.32%.
Key points of investment
Downstream market demand is weak, and short-term performance is under pressure
The company's deducted non-net profit for 2023 is estimated to be 85,000-93 million yuan, down 78.36%-76.32% from the same period in 2022. An important reason affecting the company's performance in 2023 is cyclical changes in the semiconductor industry. As a result, demand in downstream markets such as the PC and server markets is weak from the product demand side, and major global memory module manufacturers have successively relieved inventory pressure by reducing production capacity and suspending procurement. As a result, the company's SPD product sales in 2023 declined significantly compared to the same period in 2022.
EEPROM leading enterprise, coordinated development of multi-line business layout
The company currently has three main product lines: EEPROM, voice coil motor driver chips, and smart card chips.
(1) The market share of EEPROM ranks first among companies of the same type in the country. In 2018, the company's smartphone camera EEPROM products accounted for 42.72% of the global market share, ranking first in the world in this segment. In terms of automotive-grade EEPROM, the company currently has a full range of automotive-grade EEPROM products of A1 and below, and has become a supplier to many Tier 1 & Tier 2 manufacturers at home and abroad. End customers include BYD, Tesla, Porsche, Hyundai, Toyota, Volkswagen, Mazda, Geely and other domestic and foreign first-tier automobile brands.
(2) In the field of voice coil motor chips, the company is currently one of the suppliers that can provide a full range of VCM Driver products worldwide. In order to continuously expand the market into the field of higher added value, the company cooperated with industry-leading smartphone manufacturers to develop optical anti-shake (OIS) voice coil motor driver chip products with better overall control performance to meet the needs of the higher-end smartphone market. At present, this technology has made substantial progress.
(3) In the field of smart card chips, the company extended EEPROM to the application side, developed various smart card chip products such as logic encryption card series chips, contact memory card chips, CPU card series chips, etc., and has significant market advantages due to its extreme cost performance ratio.
Independent innovation seeks breakthroughs and better responds to changes in downstream demand. The company insists on independent innovation as the driving force for development, thereby better consolidating its leading market position in the EEPROM field, enriching the product layout in the field of driver chips, etc., and continuously expanding the scope of application of products. The company's current R&D expenses are mainly used to further strengthen R&D expenses such as upgrading existing products, research and development of new products, and product streaming costs, so that the company can better respond to the changing needs of the downstream application market.
Profit forecasting
It is predicted that the company's revenue for 2023-2025 will be 7.07 billion yuan, 10.39 billion yuan, and 2.98 yuan for EPS, respectively. The current stock price is 58.4, 17.1, and 11.9 times PE, respectively. Affected by the downstream semiconductor cycle, downstream market demand is weak, and performance is under pressure in the short term. As downstream memory module manufacturers' inventory levels gradually improve and the penetration rate of DDR5 memory modules continues to increase, the company's 2023Q4 SPD product sales and revenue will be significant month-on-month There is a clear recovery trend in related businesses. As a leading enterprise in the EERPOM field, the company's multi-line business layout and coordinated development under its original R&D advantages, maintaining a “buy” investment rating.
Risk warning
Market competition intensified; downstream market demand recovery fell short of expectations; new product development progress fell short of expectations; performance fell short of expectations; DDR5 penetration fell short of expectations; risk of falling product prices.