Matters:
On February 23, 2024, the company released the 2023 annual performance report:
1) 2023: Operating income of 1,311 million yuan, YoY -21.51%; net profit not attributable to mother - 236 million yuan, YoY - 194.21%; net profit after deducting net income of 322 million yuan, -290.19% (Expected amortized share payment expenses in 2023 was 221 million yuan, up 12.39% over the same period last year. Excluding the impact of share payments, the company achieved net profit to mother - 115 million yuan, net profit not returned to mother - 101 million yuan);? 2) 2023Q4: Operating income of 310 million yuan, -21.31%/+11.94% YoY; net profit to mother of 0.15 million yuan, +72.50% YoY, turning a month-on-month loss into a profit; net profit after deducting non-return to mother of -08 million yuan, a decrease in losses year-on-month.
Commentary:
Revenue continued to rise month-on-month, and the recovery of the industry cycle and the release of new products are expected to drive gradual improvement in performance. Affected by weak demand in the terminal market and customer inventory removal, etc., the company's performance declined year-on-year, but on a quarterly basis, the company's performance improved markedly. 2023Q4 revenue was +11.94% month-on-month to 310 million yuan, indicating that this round of industry inventory removal has come to an end; the profit side was affected by the rebound of equity incentive fees, and the fourth quarter improved significantly. Looking ahead to 2024, as the industry cycle picks up and the company's new products are released one after another, we expect the company's revenue to improve quarterly, while cost reduction and efficiency will also drive the company's performance flexibility.
Domestic automotive isolation chip leaders, improving layout and optimizing performance to drive a rapid increase in share. The domestic isolation and isolation+ chip market is vast and continues to expand. The company has now completed a multi-category layout, and has achieved batch supply in the fields of new energy vehicles, industrial control, communication power supplies, etc. As a leading domestic isolation chip, the company's revenue from isolation products continues to grow, and it is expected that it will continue to benefit from domestic replacement in the future. The company continues to invest in and break through in isolation technology, launching new products with low cost, high integration, and low power consumption in digital isolators, isolated power supplies, isolated sampling, etc., to continuously enhance the competitiveness of isolation products.
The company maintains a high level of investment in R&D, and expands the product matrix with endogenous extension to open up room for growth. The company focuses on continuously investing resources in the downward cycle of the industry to improve product layout, supply chain system and talent building. Relying on accumulated experience in the field of signal chains, the company successfully launched a variety of magnetic sensor products in the field of sensors and quickly released them on the client side; in the direction of power management, the company continued to launch new products such as motor drives, LED drivers, power supply power supplies, and power path protection; at the same time, it is actively deploying third-generation semiconductor devices, and the products are progressing smoothly. In addition, the company is also actively investing in Suzhou Innova and is planning to acquire Quantum Micro. In the future, it is expected that it will continue to expand its product matrix through endogenous outreach and achieve performance growth.
Investment advice: There is broad scope for domestic replacement of analog chips. As a leading manufacturer of analog chips in the domestic automotive sector, the company is expanding its product range endogenously. Considering the slow recovery in terminal demand, we lowered the company's 2023-2025 net profit forecast from -2.27/1.20/280 million yuan to -236/0.44/227 million yuan, corresponding EPS to -1.66/0.31/1.59 million yuan. Referring to comparable company valuations and the company's historical valuation level, we gave the company 10 times PS in 2024, corresponding to a target price of 138.7 yuan/share, maintaining a “strong” rating.
Risk warning: New product launches fall short of expectations; customer expansion falls short of expectations; demand for new energy vehicles falls short of expectations; industry competition intensifies.