Revenue increased year-on-year in 2023, with sales of new products contributing to revenue growth, maintaining the “purchase” rating, achieving revenue of 2.176 billion yuan, +46.57% year over year; net profit to mother of 124 million yuan, +0.99% year over year; deducted non-net profit of 0.29 million yuan, +135.96% year over year; gross profit margin of 34.20%, -5.17 pcts year over year. 2023Q4 achieved revenue of 612 million yuan in a single quarter, +94.13% year over year, -6.38% month on month; net profit to mother of 0.06 billion yuan, turning loss into profit, -91.46% month on month; net profit of -24 million yuan, +0.28 billion yuan year on year, -70 million yuan month on month; gross profit margin of 32.55%, -5.31 pcts year on month, and -1.92 pcts month on month. Due to downstream demand recovery falling short of expectations, we lowered 2024/2025 and added a profit forecast for 2026. We expect net profit to be 2.80/4.65/595 million yuan for 2024/2025/2026 (previous value was 333/476 million yuan), and EPS for 2024/2025/2026 is 2.33/3.87/4.96 yuan (previous value was 2.78/3.97 yuan). The current stock price corresponds to PE 43.8/26.3/20.5 times. We are optimistic about downstream The growth momentum brought about by the continued recovery in demand and the continued release of the company's products maintained a “buy” rating.
Downstream demand recovery+new product release drive revenue growth. High R&D investment strengthens core barriers by product application downstream, benefiting from the gradual recovery of the downstream consumer market. The company's BES2700 series smart wearable chips rapidly released and downstream application areas continued to expand. All downstream markets achieved rapid year-on-year revenue growth in 2023. Bluetooth audio chips achieved revenue of 1,529 billion yuan (accounting for 70.26%), +40.28% year over year; smartwatch and bracelet chips achieved revenue of 484 million yuan (22.24%), year on year + 66.90%
The company continues to increase investment in R&D, actively absorb outstanding talents in the market, and enhance the company's core competitiveness. In 2023, the company's R&D expenses were 550 million yuan, +25.04% year-on-year. By the end of 2023, the number of R&D personnel was 592 (accounting for 85.80%), or +13.63% year-on-year.
The continued recovery of downstream demand+product launches+new product launches brings sufficient growth momentum to the company. According to Canalys forecasts, global smartwatch shipments are expected to increase 17% year-on-year in 2024, and downstream demand is expected to continue to recover; in 2023, the company mass-produced the BES2700iBP wearable chip, achieved mass production in watch and bracelet projects of various brands, and the next-generation 6nm smart wearable chip BES2800 is expected to be mass-produced in 2024. We believe that the company's revenue is expected to continue to grow as downstream demand recovers and products continue to be released.
Risk warning: downstream demand falls short of expectations; promotion of new products falls short of expectations; industry competition intensifies.