Matters:
On March 22, 2024, the company released its 2023 Annual Report:
1) 2023: Operating income of 578 million yuan, +10.01% year on year; gross profit margin of 23.57%, -4.39pct year on year; net profit due to mother/after deduction of -0.19/ -59 million yuan, -150.24%/-404.22% year on year;
2) 2023Q4: Operating income of 156 million yuan, +24.77% /month-on-month +28.80%; gross profit margin of 23.01%, +7.39pct/month-on-month -0.50pct; net profit attributable to mother/after deduction of -0.05/-0.19 billion yuan.
Commentary:
Revenue rebounded the same month-on-month, and the recovery in the cycle combined with the release of new products is expected to drive the company's performance to continue to improve. Demand for terminals was weak in 2023, and the company actively developed the market and improved the product matrix. Increased product sales led to revenue of +10.01% year-on-year to 578 million yuan. In order to meet product layout and business development needs, the company continues to increase the introduction of high-end talents and investment in R&D, and part of the profit is 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; achieved a gross profit margin of 23.01%, +7.39pct/month-on-month -0.50pct. Looking forward to the future, as the industry cycle recovers and the company's new products continue to be released, it is expected to drive continuous improvement in performance.
The recovery in terminal demand is imminent, and domestic substitution is accelerating, and local PMIC manufacturers are expected to continue to benefit.
Currently, the domestic LED driver, DDIC and other industries have reached the end of the inventory phase, and the release of new products such as mobile phones and PCs is expected to gradually pick up 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 recover. 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 developing signal chain businesses such as amplifiers, converters, sensors, isolation chips, and interface chips. In the future, the company is expected to further increase its revenue volume and market share in the process of recovering demand and promoting domestic substitution.
The company maintains a high level of investment in R&D and broadens the product layout to open up room for growth. The company's endogenous extension expands product categories and application areas. In 2023, the company's R&D investment accounted for +5.62 pct of revenue to 27.54% year-on-year. On the AC/DC side, the company continues to launch various products such as interlaced PFC and LLC to actively promote the localization process of high-power fast charging (up to 240W) and high-power power supply (up to 3000W) applications; on the DC/DC side, the company is actively developing high-current products above 8A and high-voltage products above 60V. Among them, CMCOT architecture DC-DC products with 100V high voltage resistance have been introduced to customers and tested; on the BMS side, the company is also actively developing and supporting daisy chain cascading for 200-800V high voltage segment applications BMS AFE chip. Furthermore, the company completed a new layout of the motor drive business through the acquisition of Dongxin Micro Chengdu. In the future, the company is expected to quickly achieve breakthroughs in new businesses based on its accumulation in AC/DC and other fields.
Investment suggestions: Demand for terminals is gradually picking up, domestic substitution is accelerating, and the company continues to broaden its product layout to open up room for long-term growth. Considering that the recovery in downstream demand falls short of expectations, we adjusted the company's 2024-2025 net profit forecast from RMB 0.31 billion to RMB 0.24/05 million, and added a net profit forecast of RMB 95 million for 2026, corresponding EPS of 0.35/0.80/1.37 yuan, maintaining the “recommended” rating.
Risk warning: Industry competition intensifies; new product development progress falls short of expectations; downstream demand falls short of expectations.