Key points of investment
On February 23, 2024, the company issued the “2023 Annual Results Report Notice” and the “Notice on the Plan to Repurchase the Company's Shares through Centralized Bidding Transactions”.
The annual results showed a quarterly growth trend. Active repurchases showed confidence thanks to the recovery in terminal demand and the company's continuous expansion of the product matrix while customer stickiness increased. In 2023, the company achieved revenue of 1.78 billion yuan, an increase of 36.87%; net profit to mother of 261 million yuan, an increase of 6.15% year on year; net profit after deducting non-return to mother of 255 million yuan, an increase of 5.78% year on year.
Looking at a single quarter, 23Q4 achieved revenue of 575 million yuan, up 124.78% year on year, up 5.34% month on month; net profit to mother of 81 million yuan, a sharp increase of 1.98% month on month; net profit without return to mother of 75 million yuan, turning a year-on-year loss into a profit, a decrease of 4.89% month-on-month.
In addition, the company plans to repurchase some RMB common stock (A shares) shares already issued by the company through centralized bidding transactions, and all of the repurchased shares will be used to implement equity incentives and employee stock ownership plans. The total repurchase capital is not less than 50 million yuan (inclusive) and no more than 100 million yuan (inclusive), and the share repurchase price is not more than 44 yuan/share (inclusive).
Focusing on building end-to-end solutions, the launch of new products continues to contribute to performance growth. The company can provide end-to-end wired and wireless fast charging solutions from AC to battery, covering a power range of 10W to 300W. The products include charge management chips (including charge pump charging management chips, general charging management chips, wireless charging management chips), DC-DC chips, AC-DC chips, charging protocol chips, and lithium battery management chips.
Charge pump: According to the company's September 2023 investor research minutes, the charge pump product line accounts for about 70% of the company's overall revenue; currently, the company's charge pump product structure is complete, covering a power range of 25 to 300W. In the ultra-high power segment above 80W, the company's products are leading in the industry; in other high power segments, the company is committed to the development of highly integrated and high-performance products.
Wireless charging: The company focuses on highly integrated wireless charging solutions. In January 2024, the company's SC9222 wireless charging module passed the Qi 2.0 certification, indicating that the Nanxin wireless charging solution is fully adapted to the Apple phone ecosystem. Meanwhile, Qi2.0 certification for various Nanxin wireless charging modules is in progress. According to the disassembly of the charging head network, the main control chip of the SC9222 wireless charging module is SC9610. The SC9610 is highly integrated, integrating a 32-bit core and multiple functional modules including a full-bridge driver and a multi-channel ASK demodulator. In addition, the main control chip also incorporates a fast charging interface and supports fast charging protocols such as DP/DM, USB-PD, VOOC, AFCP, and UFCS.
Automotive: In January 2024, the company launched the SC71701Q/SC71702Q series of automotive-grade LDO chips, which can be applied to smart cockpit systems such as automotive active antennas and camera modules. At present, the company's automotive product line solutions have covered many scenarios such as high-side drive, efuse, bridge drive, DC-DC, LDO, and PMIC. According to the company's October 2023 investor survey minutes, various automotive-grade products such as HSD chips, e-fuse chips, and high-performance DC-DC chips have all entered the customer sample delivery process.
Investment advice: Benefiting from the major launch of leading domestic mobile phones in 2023, the company's revenue in 2023 exceeded our previous profit forecast. Considering that there is still some uncertainty about the current recovery in consumer terminal demand, we will adjust the profit forecast for 2024 and 2025. Operating revenue from 2023 to 2025 is expected to be adjusted from the original 1,700/24.92/3.155 billion yuan, with growth rates of 36.9%/36.0%/30.3%, respectively; net profit to mother will be adjusted from 2.51/4.17/547 million yuan to 2.61/4.00/531 million yuan, with growth rates of 6.2%/53.0%/32.7% respectively; PE 48.2/31.5/23.7, respectively.
Given that the company is a scarce target that can provide end-to-end complete solutions in the field of power supplies and batteries, the company has a perfect structure, more cutting-edge research and development in the field of charge pump technology, and the product matrix continues to be rich, so I am optimistic about the company's future product structure and application field expansion. Continued recommendation, maintaining a “buy” rating.
Risk warning: Downstream terminal market demand falls short of expectations; risk that new technologies, new processes, and new products cannot be industrialized as scheduled; market competition increases risks; systemic risks, etc.