4Q23 results are in line with our expectations
The company released its 2023 annual report: annual revenue of 5,040 billion yuan, +18.9% year-on-year; net profit to mother of 641 million yuan, +48.0% year-on-year. The results were in line with our expectations.
4Q23 maintained a high level of prosperity in a single quarter: revenue of 1,364 billion yuan, +29.1%/+1.5%, a record high for the third consecutive quarter; gross profit margin of 37.0%, +6.6pp/ +0.7ppt, increasing for the fourth consecutive quarter, mainly due to high order sentiment, increased capacity utilization and labor efficiency optimization; net profit of 163 million yuan, a significant year-on-year increase, mainly due to higher cost growth than revenue during the period, as well as loss of impairment of inventory and loss of 0.2 billion yuan. Loss of value .
By business line: 2023 signal processing revenue of 2.06 billion yuan (+26% YoY), power management revenue of 1.87 billion yuan (YoY +11%), revenue dedicated to automotive electronics or energy storage of 680 million yuan (+24% YoY), and revenue from ceramics, PCBs and others (+18% YoY).
Development trends
With a good start in 2024, we are optimistic about the steady recovery of traditional businesses and the rapid development of emerging businesses. According to the annual report, January 2024 sales reached the highest sales volume for each month in the company's history. We believe, on the one hand, that with the single-digit year-on-year increase in shipments of terminal products such as smartphones and PCs (Canalys expectations) and the continued introduction of the company's LTCC and integrated products in clients, revenue in traditional application fields is expected to grow steadily in 24 years. On the other hand, the company is committed to R&D innovation and management innovation. We have seen that the new products developed by the company in the early stages have been widely used for 23 years. Among emerging businesses, 1) We believe that customers in the automotive electronics sector are expected to grow rapidly in 24/25 as the company's own batch delivery capacity is further enhanced, new products and projects continue to be launched, and the depth and breadth of cooperation between the company and customers is deepening; 2) In the field of photovoltaics and energy storage, the company has been working in the field of microinverters for many years, and we believe that it has been recognized by domestic and foreign industry benchmark companies, and the business is expected to develop rapidly after the industry inventory is digested; 3) It can supply power inductors for power management to data center servers. We believe that as demand for computing power continues to rise and domestic hardware manufacturers make technological breakthroughs, data center related products are expected to bring new growth to the company.
Profit forecasting and valuation
The profit forecast for 2024/2025 remained unchanged, and net profit attributable to mother was $932/1,205 million yuan. The current stock price corresponds to 2024/2025 P/E 23.7x/18.4x. Maintaining an industry rating and a target price of 34.66 yuan, corresponding to the 2024/2025 P/E 30.0x/23.2x, an increase of 26% from the current stock price.
risks
Demand for consumer electronics terminals fell short of expectations; introduction of new products fell short of expectations; new market expansion fell short of expectations.