Incident: The company released its 2023 annual report. In 2023, the company achieved revenue of 1.78 billion yuan, an increase of 36.87% over the previous year; realized net profit of 261 million yuan, an increase of 6.15% over the previous year; and realized deducted non-net profit of 255 million yuan, an increase of 6.54% over the previous year. On a quarterly basis, Q4 achieved revenue of 575 million yuan in 2023, up 124.78% year on year, up 5.34% month on month; realized net profit of 81 million yuan, up 28006.14% year on year, up 1.98% month on month; realized deducted non-net profit of 75 million yuan, turning loss into profit year on year, down 4.89% month on month.
Revenue grew quarterly in '23, and gross margin remained stable: Revenue side: The company's revenue for each quarter of 2023 was 286 million yuan, 375 million yuan, 545 million yuan and 575 million yuan, respectively. The annual results continued to grow quarter by quarter. The main reason was that the company continued to expand its product layout around application scenarios and continue to launch market-competitive products, and the performance continued to improve. Profit side: The company's gross margin in '23 was 42.30%, -0.74pct; the net profit margin was 14.68%, -4.25pcts year on year; the company's gross margin remained stable, but the net interest rate declined year on year, mainly due to the year-on-year increase in expenses during the company period. Expense side: Sales/management/R&D/finance expenses rates in 2023 were 4.38%/8.63%/16.43%/-2.39%, respectively, with year-on-year changes of +0.14/+2.34/+2.11/0pct, respectively. The year-on-year increase in R&D expenses is mainly due to the company's increased investment in R&D, an increase in the number of R&D personnel, and a significant year-on-year increase in investment in related remuneration, R&D materials, etc.
Enrich the product matrix and enhance product competitiveness: The company opens up the entire product application field in the fields of smart phones, automotive electronics, industry and pan-consumption. The product matrix is rich, completes the end-to-end product layout for various application scenarios, and strengthens the company's overall product innovation competitiveness. In the smartphone field, the company improved the product layout of the smartphone's overall charging link to achieve full coverage of wired charging, wireless charging, screen driver chips, and lithium battery protection chips. The company uses wired charging chips to reach deep partnerships with mainstream domestic mobile phone manufacturers, and is actively promoting the introduction of other product lines in the mobile phone field to increase the stand-alone value of the company's products in mobile phones. In the field of automotive electronics, the company carries out product layout planning in the fields of automotive instruments, smart cockpits, ADAS, and BMS. The company's main wafer suppliers and main sealing and testing suppliers are mainly well-known enterprises in the industry. Since the company tilts production capacity towards leading suppliers and increases order demand, it can obtain a better price advantage. Through strategic cooperation with upstream suppliers, the company develops its own processes, maintains product leadership in wafer manufacturing and packaging processes, and further enhances the competitiveness of the company's products.
The automobile market continues to grow, and the layout of the automotive electronics sector is progressing smoothly: According to data from the China Association of Automobile Manufacturers, in 2023, China's automobile production and sales volume reached 30.61 million units and 30.94 million units respectively, up 11.6% and 12% year on year, respectively, and annual production and sales both reached record highs. Benefiting from the growth of the automotive electronics market and several new automotive-grade products launched by the company, within 23 years, the company achieved revenue of 30.641 million yuan in automotive electronics applications, an increase of 89.02% over the previous year. The company's products have entered Volvo, Hyundai and other brands. The company attaches great importance to the automotive electronics business, invests many resources, and develops multiple projects at the same time. The company's USB and wireless charging solutions have achieved large-scale mass production on the client; new products such as high-performance DC-DC power chips, HSD chips, and e-Fuse chips have achieved large-scale sample delivery on the client, and some customers have already entered the targeted design stage of the project. Under the transformation of electrification, traditional fuel powertrain systems have been eliminated. Electric powertrain systems use new components such as BMS and DC-DC converters, and demand for power supply and battery management chips has increased dramatically. Automotive electronics has become another sector driving the rapid growth of the power supply and battery management chip market after the consumer sector; the company expects the automotive electronics business to maintain a relatively rapid growth rate in 24. In this context, we believe that the company's performance is expected to continue to improve as demand for automotive electronics grows.
Upgraded to “buy” rating: The company has a key layout in several major markets. In the future, it will blossom more in the fields of mobile communications, automotive electronics, adapters, mass consumption, etc., and the company will continue to improve the entire charging link product ecosystem around these fields. With forward-looking product definition capabilities and strong R&D capabilities, the products have advantages such as leading performance and high reliability, and have been widely recognized by customers in the fields of smart phones, automotive electronics, industry and pan-consumer; along with the recovery trend of the consumer electronics market, the company is expected to become the world's leading analog and embedded chip enterprise, so we upgraded to a “buy” rating; the company's net profit for 2024-2026 is 350 million yuan, 478 million yuan, 598 million yuan, and EPS is 0.83 million yuan, respectively Yuan, 1.13 yuan, 1.41 yuan, corresponding PE is 37X, 27X, and 22X, respectively.
Risk warning: Production capacity release falls short of expectations, risk of market demand fluctuations, risk of price fluctuations of important raw materials, risk of market competition.