Revenue increased month-on-month in the fourth quarter, and gross margin was under pressure. As demand for terminals fell short of expectations and increased market competition, the company achieved revenue of 1,094 billion yuan (YoY -38.68%), net profit of 34.71 million yuan (YoY -113%), net profit after deducting non-attributable net profit of 113 million yuan (YoY -160%), and net profit of 1.1895 million yuan after excluding share payment fees; gross margin decreased 6.8 pct to 51.79% due to price competition and product structure changes, R&D expenses fell 15% to 554 million yuan, and R&D rates increased 13.9pct to 50.69%.
Among them, 4Q23 had revenue of 280 million yuan (YoY -10.9%, QoQ +39.3%), net profit attributable to mother - 51.02 million yuan, net profit not attributable to mother - 63.22 million yuan, gross profit margin of 46.61% (YoY -12.5 pct, QoQ -3.4 pct).
New products continue to be launched in various product lines, and embedded processor products have achieved breakthroughs of 0 to 1. By product line, in 2023, the company's signal chain chip revenue was 869 million yuan (YoY -31.20%), accounting for 79%, and gross margin fell 7.96pct to 54.28%; power management chip revenue was 218 million yuan (YoY -58.06%), accounting for 20%, and gross margin fell 7.53pct to 42.28%. In order to enhance competitiveness, the company continues to diversify product categories and models. Among them, embedded processor products have achieved breakthroughs of 0 to 1, and a total of 26 products in the two mainstream product lines of the TPS32 mixed signal microcontroller family have been mass-produced and released.
Automotive-grade products are progressing smoothly, and more than 110 products have been launched. The company launched a series of automotive-grade products in 2023, and has launched more than 110 products in more than 20 categories, covering applications such as power, cockpit, smart driving, body, and chassis in automotive electronic systems. It includes leading domestic automotive-grade PMIC chips to meet the stable, efficient and flexible power management requirements in automotive smart cockpits, ADAS and other systems; the first automotive-grade CAN transceiver supporting specific frame wake-up was launched, and successfully used in automotive systems including body electronics, power systems, in-vehicle infotainment, and ADAS.
The self-built Suzhou Test Center is officially put into operation, and it is planned to wholly acquire Chuangxin Micro. In 2023, the company's self-built Suzhou Test Center was officially put into operation, extending the design to testing industry chain. It will be autonomous and controllable in high-end product wafer testing and finished product testing, which can enhance the synergy between R&D technology and testing processes, and provide strong support for the company's supply chain security, technical confidentiality, and R&D iteration. Also, according to the announcement issued by the company on February 6, 2024, the share ratio of Chuangxin Micro to be acquired was raised from the previous 85.2574% to 100%. After the transaction is completed, Chuangxin Micro will become a wholly-owned subsidiary of the company.
Investment advice: The company's product models and downstream application fields continue to be enriched. To maintain the “purchase” rating, we expect the company's net profit to be 2.13/3.31/485 million yuan in 2024-2026 (the value before 2024-2025 was 2.09/330 million yuan), and the PE corresponding to the stock price on March 29, 2024 is 64/41/28x, respectively. The company's products and application fields continue to be enriched, automotive-grade products are progressing smoothly, and profitability will gradually improve as rates drop, maintaining a “buy” rating.
Risk warning: New product development falls short of expectations; demand falls short of expectations; risk of acquisition failure.