4Q23 revenue grew 12% month-on-month, and high investment put pressure on profitability. According to the company's 2023 performance report, the company's annual revenue fell 21.51 percent year on year to 1,311 billion yuan due to factors such as the overall macroeconomic and semiconductor cycle decline, and customer inventory removal behavior. At the same time, the company continued to increase investment, leading to a continuous rise in sales expenses, management expenses, and R&D expenses. Net profit attributable to mother was 236 million yuan (YoY -194.21%) throughout the year, and net profit not attributable to mother was 322 million yuan (YoY -290.19%).
In addition, the company's share payment expenses in 2023 reached 221 million yuan, and net profit to mother after excluding share payment fees was -15.08 million yuan. Looking at a single quarter, 4Q23 achieved revenue of 310 million yuan (YoY -21%, QoQ +12%), net profit to mother of 14.86 million yuan (YoY -21%, QoQ +12%), net profit to mother of 14.86 million yuan (YoY +73%, QoQ +112%), and net profit of non-return to mother of 8.1 million yuan (YoY +127%, QoQ +94%).
With the exception of the optical storage market, downstream demand is gradually recovering. The company's application areas include pan-energy, automobiles, and consumer electronics, accounting for 61%, 28%, and 11% of revenue in the first three quarters of 2023, respectively. Among them, Pan-Energy specifically includes photovoltaics and energy storage, industrial, digital power, etc. Looking at downstream demand, with the exception of downstream storage customers who are still removing inventory, all other downstream demand is gradually recovering. Among them, automotive electronics removed inventory in 2Q23, and 3Q23 revenue has increased markedly sequentially, further increasing its share of the company's revenue.
Numerous new products are expected to contribute revenue in 2024. Many new products launched by the company in the fields of magnetic sensors, isolation products, and power management products are expected to contribute revenue in 2024. 1) In terms of magnetic sensors, the revenue of magnetic current sensors in 2023 mainly comes from the photovoltaic market, which is expected to gradually expand to automotive three-electric system applications in 2024; at the same time, products such as magnetic angle and magnetic switch sensors will also gradually contribute to revenue.
2) In terms of isolation products, isolated drive products with protective functions have been mass-produced in main drive applications for some NEV customers. Functional safety main drive isolation drive products are expected to be mass-produced and launched on the market in 2024. 3) In terms of power management products, power supply LDO has already been introduced by some customers and is expected to gradually contribute revenue in 2024; products related to high-side switches will be mass-produced in 2024.
Investment advice: Focus on pan-energy and automotive electronics, maintain the “purchase” rating. Since the company's 2023 revenue did not meet the 2022 equity incentive plan target, there was a rebound in share payments in 4Q23, and the 2023 net profit loss margin was lower than our previous forecast. Referring to the performance report, we raised the company's 2023 net profit from -379 million yuan to -236 million yuan; considering that the company's downstream demand has gradually recovered and implemented cost reduction and efficiency measures, we slightly raised the company's 2024-2025 net profit to -1.53 billion yuan /+0.89 billion yuan (previous value -1.81 billion yuan + 0.80 billion yuan).
The PS corresponding to the stock price on February 23, 2024 is 12/9/7x, respectively. The company focuses on the pan-energy and automotive sectors. Downstream demand has gradually recovered, new products have been introduced smoothly, and the “buy” rating is maintained.
Risk warning: demand falls short of expectations, product development falls short of expectations, and customer introduction falls short of expectations.