Incident: On February 27, 2024, the company announced its 2023 performance report. In 2023, it achieved operating income of 103.7416 million yuan, up 35.17% year on year; net profit to mother - 203.199 million yuan, a decrease of 9.1008 million yuan compared to the same period last year; realized net profit not deducted to mother - 67.7072 million yuan, a decrease of 2.8983 million yuan from the same period last year. The performance is in line with expectations.
Sales revenue continued to grow, and the performance was in line with expectations: the company's performance in 2023 was in line with expectations, revenue increased 35.17% year on year, and net profit loss to mother decreased by 9.1008 million yuan year on year, mainly because: 1) As a hard technology enterprise, the company continued to improve product richness and performance and functional indicators to maintain a high level of investment in R&D; 3) In addition, the company's financial expenses in 2022 were affected by fluctuations in foreign currency loan exchange rates, causing large exchange losses in the current period. Financial expenses in 2023 are down compared to last year1. We believe that the company continues to maintain a high level of investment in R&D, continues to rapidly transform core technology into customer orders to drive continuous growth in sales revenue, and is expected to reverse loss and profit, and continue to be optimistic about the company's long-term development.
A leading domestic switch chip company, with products catching up with overseas+localization to replace two-wheel acceleration: As a domestic “Little Broadcom”, the company's main Ethernet switching chip products currently cover 100G~2.4Tbps switching capacity and 100M~400G port speed. Benchmarking overseas leaders such as Broadcom and Marvell, the highest rate products are expected to open up the hyperscale data center market. Data centers will become the main driving force for the future growth of China's commercial Ethernet switching chip market2. Including Sora's big data model Continued releases have a positive effect on improving computing power3. We are optimistic about the company's rapid development in the field of switch chips; in addition, the company relies on Chinese electronics and has multiple localization advantages compared to overseas companies, and is currently gradually promoting localized replacement of wafer procurement and chip sealing services in new products4; we believe that the current demand for AIGC computing power continues to be strong, while benefiting from the national strategic goals and supply chain security considerations of science and technology powers, the demand for domestic Ethernet switching chips and switching equipment is expected to continue to increase in the future.
Profit forecast and investment rating: We predict that the company's revenue for 2023-2025 will be 10.4/1,43/1.79 billion yuan, corresponding to PS 16/12/10 times. As a leading domestic switch chip enterprise, the company is a leading domestic switch chip company. Given the rapid transformation of the company's switching chip technology into revenue, the localization process is accelerated, and we continue to be optimistic about the company's future performance development, and maintain a “buy” rating.
Risk warning: Risk of gaps between technical standards and industry leaders; risk of developing new products falling short of expectations; risk of high supplier concentration; risk of macroeconomic and industry fluctuations.