研发费用增长35%；持续开展核心技术攻关。2023 年期间费用率同比增加3.5ppt 至18.1%，其中：1）销售费用率同比增加0.5ppt 至5.1%；2）管理费用率同比增加1.7ppt 至7.9%；3）研发费用率同比增加1.1ppt 至4.1%，2023年研发费用同比增长35.4%至1.4 亿元。公司拥有泉州、广州、成都、厦门多处研发中心，持续与国内多家内外电极浆料、瓷粉供应商开展核心技术攻关，对标现有产品实现原材料国产化技术支撑。截至2023 年末，公司：1）应收账款及票据19.9 亿元，较年初减少11.1%；2）预付款项0.2 亿元，较年初增加22.6%；3）存货13.1 亿元，较年初增加5.5%；4）合同负债0.1 亿元，较年初减少7.2%。Incident: The company released its 2023 annual report on March 18, achieving full-year revenue of 3.50 billion yuan, YoY -1.5%; net profit to mother of 320 million yuan, YoY -60.3%; deducting non-net profit of 310 million yuan, YoY -59.8%. The performance was in line with market expectations. The company's performance declined due to declining industry sentiment and weak consumer electronics.
4Q23 revenue increased 9% year over year; changes in product structure affected profit margins. 1) Looking at a single quarter: 4Q23 achieved revenue of 790 million yuan, YoY +9.3%; net profit to mother of 0.26 million yuan, YoY -68.5%; deducted non-net profit of 30 million yuan, YoY -61.0%. 2) Profitability: 4Q23 gross margin decreased by 7.1ppt to 27.1% year on year; net margin decreased by 9.0ppt to 3.2% year on year. Gross margin decreased 11.8ppt to 30.6% yoy in 2023; net margin decreased 14.3ppt to 8.9% yoy. The increase in the share of demand from low-margin trading business customers in 2023 is the main reason for the decline in the company's gross margin.
Self-produced ceramic materials increased by 59%; advanced active components through Xiamen Core Generation. By product, 2023:1) Self-produced passive components: achieved revenue of 1.0 billion yuan, YoY -32.2%, accounting for 29% of total revenue, and gross margin decreased by 4.68ppt to 74.2% year-on-year; 2) Self-produced active components: achieved revenue of 120 million yuan, accounting for 4% of total revenue. The company entered the field of active components through Xiamen Chip Generation, mainly engaged in semiconductor chips such as MOSFETs, IGBTs, analog ICs, and third-generation power devices. Downstream applications cover consumer electronics, industrial and new energy vehicles. 3) Self-produced ceramic materials: Achieved revenue of 160 million yuan, YoY +58.5%, accounting for 5% of total revenue, and gross margin decreased 15.41ppt to 55.6% year-on-year. The subsidiary Riya New Materials CASAS-300 Special Ceramic Materials has mastered a series of proprietary technologies for the industrialization of “high-performance special ceramic materials” through exclusive technical licensing and independent research and development, and the product performance and production capacity already have a stable supply capacity. 4) International trade business: Achieved revenue of 2.19 billion yuan, YoY +13.3%, accounting for 63% of total revenue, and gross margin decreased by 2.54 ppt to 10.5% year-on-year.
R&D expenses increased by 35%; continue to carry out core technical research. The cost ratio increased by 3.5ppt to 18.1% year on year in 2023, including: 1) the sales expense ratio increased by 0.5ppt to 5.1% year on year; 2) the management cost ratio increased by 1.7ppt to 7.9% year on year; 3) the R&D cost ratio increased by 1.1 ppt to 4.1% year on year, and R&D expenses increased 35.4% year on year to 140 million yuan in 2023. The company has many R&D centers in Quanzhou, Guangzhou, Chengdu and Xiamen, and continues to carry out core technical research with many domestic and external electrode paste and porcelain powder suppliers to achieve technical support for the localization of raw materials for existing products. By the end of 2023, the company: 1) accounts receivable and notes were $1.99 billion, down 11.1% from the beginning of the year; 2) prepayments of $0.2 billion, up 22.6% from the beginning of the year; 3) inventory of $1.31 billion, up 5.5% from the beginning of the year; 4) contract liabilities were $0.1 billion, down 7.2% from the beginning of the year.
Net cash flow from operating activities in 2023 was $870 million, YoY -6.4%.
Investment suggestions: The company is a leading enterprise in special MLCC, laying out active power devices to create core competitiveness; ceramic-based composites have large-scale production capacity, which is expected to open up new space for growth; international trade expands the Southeast Asian market and gradually creates benefits. We expect the company's net profit from 2024 to 2026 to be 375 million yuan, 438 million yuan, and 505 million yuan, respectively. The current stock price corresponding to 2024-2026 PE is 28x/24x/21x.
We maintain a “Recommended” rating based on the company's position in the industry and the growth of new businesses.
Risk warning: downstream demand falls short of expectations; new product development falls short of expectations, etc.
