The company released the 2023 performance report. The results are in line with our expectations. The company released the 2023 performance report. In 2023, it achieved revenue of 284 million yuan, YoY +16.88%; realized net profit of 76 million yuan, YoY -29.16%; realized deducted non-net profit of 67 million yuan, YoY -34.02%. The company's performance was in line with our expectations.

Key points of interest

The scale of revenue has been steadily expanding, and cost investment is suppressing profit performance. 1) The company's revenue scale expanded steadily in 2023. We believe it mainly benefited from rich product matrices and structural optimization, and the continuous expansion of downstream applications of high-speed and high-precision AD/DA, power management chips, microsystems and modules; 2) The company's profit side declined year-on-year. We think it was mainly due to the company's increased investment in R&D and market development, and profit performance under high pressure on sales, management and R&D expenses; 3) According to the performance report, the company's revenue for the single quarter was 113 million yuan, YoY +21%; net profit of 36 million yuan was flat year-on-year, with a year-on-year increase of 467%.

Increase research and development to build industrial advantage, and technological innovation accumulates long-term growth momentum. 1) The company continued to increase research and development during the reporting period. According to the company's semi-annual report, in the first half of 2023, the company finalized more than 20 power management chips, and the product matrix continued to expand. High-speed and high-precision AD/DA made varying degrees of progress in the fields of digital phased arrays, electronic countermeasures, data chains, etc.; 2) In December 2023, the company announced the purchase of office buildings to improve the R&D office environment and accelerate the construction of fund-raising projects.

We believe that high-intensity R&D investment is expected to enhance the company's competitiveness in the fields of radio frequency, high-speed and high-precision AD/DA, microsystems, power management chips, etc., and accumulate long-term growth momentum for the company.

Deeply involved in special RF analog chips, it is expected to benefit from the development of the satellite industry and the improvement in the level of informatization and localization of special equipment. 1) The company is one of the few domestic enterprises that can provide special RF analog chip solutions. The products are widely used in information technology equipment such as satellite internet, data links, communication terminals, phased arrays, etc., and announced that it was selected as the fifth batch of specialized and new “Little Giant” enterprises by the Ministry of Industry and Information Technology in July 2023; 2) The company closely follows low-orbit satellite industry trends, and various power management chips have been applied on the planet. The size and weight of the newly developed SiP product has been reduced by 90% compared to traditional solutions, effectively reducing the cost of small satellite development. We believe that the improvement in the informatization of special equipment and localization of core devices is expected to help the company grow in the long term; the company closely follows trends in the satellite industry and is expected to share the dividends of the low-orbit satellite constellation industry with technical barriers and first-mover advantages.

Profit forecasting and valuation

Considering the release of the company's downstream demand and the pace of expenditure investment, we lowered the company's 2023/2024 net profit forecast of 31.9%/28.1% to 0.76 billion yuan, and introduced the 2025 revenue/net profit forecast of 693/191 million yuan. The company's current stock price corresponds to the 2024/2025 price-earnings ratio of 68.3/42.4 times. We maintain an outperforming industry rating. Considering the company's competitive advantage and long-term growth space, we maintain a target price of 64.67 yuan, corresponding to a price-earnings ratio of 51.9 times in 2025, with a potential increase of 22%.

risks

1) Macroenvironmental and policy risks; 2) Risks that orders and deliveries fall short of expectations