Incidents:
On March 30, the company released its 2023 annual report. In 2023, it achieved operating revenue of 2,338 billion yuan, a year-on-year decrease of 12.73%. Among them, semiconductor IP licensing business (including revenue from intellectual property licensing fees and royalties) fell 14.39% year on year, and one-stop chip customization business (including revenue from chip design business and mass production business) decreased 12.13% year on year. Net profit attributable to mother - 296 million yuan, net profit not attributable to mother - 318 million yuan.
Market demand was sluggish in 2023, and high R&D investment helped the product system become more and more rich:
Beginning in 2021, global semiconductors entered a downward cycle. According to the announcement, the year-on-year decline in the company's revenue was mainly due to a slowdown in overall market demand. However, the company continues to invest heavily in R&D. It already has various one-stop chip customization solutions such as high-definition video, high-definition audio and voice, in-vehicle entertainment system processors, video surveillance, IoT connectivity, smart wearables, high-end application processors, data center video transcoding acceleration, intelligent pixel processing, etc., as well as autonomous and controlled graphics processor IP (GPU IP), neural network processor IP (NPU IP), video processor IP (VPU IP), digital signal processor IP (DSP IP), image signal processor IP (ISPIP), and Display Processor IP (Display Processor IP) These six types of processor IP, more than 1500 digital-analog hybrid IPs, and RF IPs.
Continuously optimizing and iterating core technologies is expected to continue to benefit AIGC's development:
According to the announcement, the company continues to conduct in-depth technology research and development in key application areas such as artificial intelligence, the Internet of Things, high-definition video applications, data centers, and Chiplets. In the AIGC field, AI GPU IP subsystems were launched based on self-developed GPUs and NPU IPs. AI GPUs can also choose GPUs to accelerate neural network computation according to different application requirements to achieve flexible and efficient AI computation; in the field of edge artificial intelligence, launch a series of innovative AI-ISP and AI-GPUs; in the field of IoT, continue to expand the layout of RF IP products and platform solutions on the 22nm FD-SOI process, including support for dual-mode Bluetooth, low-power Bluetooth BLE, NB-IoT, IoT connectivity technologies such as multi-channel GNSS and 802.11ah; in the automotive sector, ISP 8200L-FS and ISP 8200-FS have passed ISO 26262 certification, reaching random fault safety level ASILB level and systematic fault safety level ASIL D level; in the Chiplet field, starting with interface IP, Chiplet chip architecture, advanced packaging technology, and solutions for AIGC and smart mobility, we continue to promote the company's Chiplet technology and projects development and industrialization.
We believe that the company is expected to continue to benefit from the development and industrialization of new technologies such as AIGC, autonomous driving, edge AI, and Chiplet.
Investment advice:
We expect the company's revenue from 2024 to 2026 to be RMB 2,876 billion, RMB 3,537 billion, RMB 4.245 billion, and net profit to mother of RMB 0.08 billion, RMB 171 million, RMB 357 million, and EPS of RMB 0.02, 0.34 yuan and 0.71 yuan respectively. Considering that the company is one of the leading domestic IP licensing and chip timing service companies, it will maintain a high level of R&D investment in the early stages, and a target price of 57.5 yuan corresponding to 24 years.
Risk warning: Market demand falls short of expectations; promotion of new products falls short of expectations.