Matters:
On February 23, 2024, the company issued an announcement of the 2023 annual results report:
1) 2023: Operating income of 578 million yuan, up 10.01% year on year; net profit to mother - 0.19 million yuan, a decrease of 150.24% year on year; net profit after deducting - 59 million yuan, a decrease of 404.22% year on year;
2) 2023Q4: Operating income of 156 million yuan, up 24.77% year on year, up 28.80% month on month; net profit to mother -0.05 billion yuan, net profit after deducting net profit to mother - 19 million yuan.
Commentary:
Revenue improved month-on-month, and the recovery in demand combined with the release of new products is expected to drive the company's performance back to a high growth trajectory. Demand for terminals was weak in 2023, and the company actively developed the market. Increased product sales led to +10.01% year-on-year revenue. In order to meet product layout and business development needs, the company continued to increase R&D investment. In 2023, R&D investment accounted for about 30% of revenue, providing a solid guarantee for long-term development, and the profit portion was affected by the increase in R&D expenses. On a quarterly basis, the recovery in downstream demand led to a gradual improvement in the company's performance. 2023Q4 achieved revenue of 156 million yuan, +24.77% YoY/+28.80% month-on-month. Looking forward to the future, as the industry cycle recovers and the company continues to release new products, it is expected to drive performance back to a high growth path.
The recovery in terminal demand is imminent, and domestic substitution is accelerating, and local PMIC manufacturers are expected to continue to benefit.
Currently, domestic chip companies in LED drivers, DDIC and other industries have reached the end of the inventory phase, and the release of new products such as mobile phones is expected to drive a gradual recovery in demand for related pan-consumer chips. Referring to the current state of the industry cycle, we believe that the semiconductor industry boom cycle has begun to pick up. In terms of the competitive landscape, at present, the localization rate of power management chips in China is still low. In the context of the last round of core shortages combined with domestic substitution, domestic manufacturers such as Biyi Wei have gradually risen in some segmented tracks. At present, the company has become an advantageous supplier in the driver IC and AC/DC markets. At the same time, the company is actively expanding new products such as DC/DC, motor/gate drivers, battery management, etc., and is expected to continue to benefit from the recovery in demand and the promotion of domestic substitution in the future.
The development of the new energy market has led to a sharp rise in the volume and price of BMIC chips, and the company's active layout opens up room for long-term growth.
The rapid development of terminals such as photovoltaic energy storage and electric vehicles is driving the increasing importance of battery management chips. Due to the high technical barriers of BMIC chips, the main players in the market are currently leading global manufacturers such as TI and MAXIM. As one of the few domestic companies that have achieved breakthroughs in high serial number AFE chip technology, Biyiwei already has core technology that can support up to 18 strings of “high-precision lithium battery monitoring and protection”. The products can cover energy storage and battery system applications within 110V, and can be used in many fields such as wearable electronic products, power tools, drones, and power battery packs. Currently, the company is actively promoting the marketization process of AFE chips and speeding up the development of new products such as battery protection and fuel meters, and is expected to rapidly contribute to performance growth in the future.
Investment suggestions: Demand for terminals is gradually picking up, domestic substitution is advancing at an accelerated pace, and the company continues to broaden its product layout to open up room for long-term growth. Considering that downstream demand is recovering less than expected, we adjusted the company's net profit forecast for 2023-2025 from -0.18/0.40/0.82 billion yuan to -0.19/0.31 billion yuan, corresponding EPS of -0.27/0.44/0.88 yuan, maintaining the “recommended” rating.
Risk warning: Industry competition intensifies; new product development progress falls short of expectations; downstream demand falls short of expectations.