The IoT market continues to grow: According to the latest data from IoT Analytics, the global IoT market is expected to grow to $483 billion by 2027. The number of active IoT device connections worldwide in 2022 was 14.4 billion, and is expected to grow 16% to 16.7 billion in 2023. According to Ericsson's “Ericsson Mobility Report” released in June 2023, the number of cellular IoT global connections in 2022 was 2.7 billion, and by 2028, the number of cellular IoT global connections will exceed 5.4 billion. The application of IoT technology in various industries is also constantly expanding. IoT technology continues to develop and improve, and the deep integration of AI, 5G, edge computing and IoT will provide growth impetus for the digital transformation of the industry.
The company continues to enrich its product line. 5G: In the first half of 2023, Yiyuan Communications was the first in the world to release the latest 3GPP R17 industrial-grade 5G communication series module, RG650x, which supports SoC solutions and adapts to the latest Wi-Fi 7 technology, which can improve the transmission rate of customer applications and enhance overall network capacity. Intelligent module: The company's next-generation ultra-high computing power intelligent module, SG885G, has a built-in 48Tops computing power AI calculation acceleration processor. Combined with multiple PCIE expansion technology, it can simultaneously handle the parallel and stable operation of more cameras during the color sorter inspection process, and has a higher cost performance ratio. LTE module: While maintaining steady development, the LTE product line continues to expand its product sequence. Among them, the LTE CAT1 module EC600G series/EC800G series can directly implement digital-to-analog conversion (DAC) functions through software algorithms, achieve better overall cost, and are more advantageous in industries such as cloud speakers. LPWA module: In the first half of 2023, the company launched the LPWA module BG950S-GL, which has ultra-low power consumption, 5G IoT capabilities, and supports Wi-SUN, U-Bus Air, WMBUS, Isim, positioning technology, and NTN technology defined by 3GPP R17. It can be used in various vertical markets such as meters, trackers, wearables, and connected health. Wi-Fi module: In the first half of 2023, the company's newly launched Wi-Fi 6E module supports a maximum bandwidth of 160 MHz, supports three bands of 2.4G/5G/6G, introduced advanced 1024-QAM modulation technology, supports simultaneous operation in 2.4G and 5/6G bands, provides speeds of up to 3 Gbps, and provides lower latency.
2023Q4's revenue and profit stabilized. According to the company's 2023 performance forecast, since the third quarter of 2023, downstream demand in the IoT industry where the company is located has gradually picked up, and the company has continued to explore vertical IoT application fields, which led to an increase in revenue in the fourth quarter, which increased by about 12.02% over the previous quarter. Since the second half of 2023, the company has also taken various measures to reduce costs and increase efficiency. The profit loss situation has been effectively controlled. In the second half of 2023, the company's profitability improved, and gross margin increased.
Profit forecasting, valuation and ratings: According to the company announcement, the company was affected by factors such as the global economic environment and market sentiment in 2023, and we expect this impact to continue. We lowered the company's 2023-2025 net profit forecast to RMB 0.85/504/701 million, which is 89%/46%/38% lower than the previous one, corresponding to PE131/22/16X. We believe the Internet of Things is expected to help the company grow in the long term and maintain a “buy” rating.
Risk warning: risk of declining gross margin; risk of exchange rate fluctuations.