Weak demand for terminals in 2023 puts pressure on performance, benefiting from AI phones/AI server innovation trends for a long time
Peng Ding released its annual report, with 2023 revenue of 32.066 billion yuan (YoY: -11.45%) and net profit to mother of 3.287 billion yuan (YoY: -34.41%). In 2023, demand for computers and tablets is still weak, hampering the profitability of the consumer electronics business, particularly Mini-LED. From January to January 2024, we saw that the company's revenue was -6.6% year over year, and the year-on-year decline narrowed. Looking ahead, we are optimistic: 1) global smartphone/PC demand will gradually pick up in 2024, and the launch of AI terminals will bring new demand for computer and mobile phone products; 2) the company's product layout in the server and automotive fields is gradually obtaining customer certification. We gave Peng Ding an EPS forecast of 1.56/1.80/2.05 yuan for 24/25/26. We are optimistic that the company will gradually contribute revenue in the fields of vehicles, high-speed servers, ARVR, etc. At the same time, the company is leading in global deployment, and AI terminal innovation is expected to drive the volume and price of the company's products to rise sharply. We gave it an expected PE of 18x in 24 (comparable Wind consistent expected average: 15.3x), a target price of 28.1 yuan, and reaffirmed the purchase rating.
2023: The basic communication board market is stable. Looking at products with a high year-on-year increase in automobile and server product revenue, 1) Despite the decline in global smartphone shipments in 2023, the company's communication board product revenue was still +3.7% to 23.513 billion yuan, which is stable; 2) Consumer electronics and computer board product revenue YoY was -39.59% to 7.975 billion yuan, mainly due to weak demand for PCs and other terminals in 2023; 3) Vehicle and server product revenue +71.45% to 539 million yuan, 1H23 radar operation boards Mass production was successful, and 4Q23 lidar and radar high-frequency antenna boards began mass production. The board layer for the main production of server boards has been upgraded to 16 to 20L or above, and certification plans with mainstream domestic server suppliers are being carried out as scheduled. The Thai factory is expected to be put into operation in the second half of 2025.
2024: AI servers benefit from computing power infrastructure construction, card bit MR benefits from consumer electronics innovation and looks forward to the future; 1) In the communications and consumer electronics sector, we are optimistic that global consumer electronics terminal demand will recover in 2024, and believe that AI will bring new opportunities to mobile phones, PCs, and ARVR, and become an important factor driving the next wave of switching. Furthermore, I am optimistic about the potential revenue increase brought about by the gradual increase in the company's share of modular products; 2) in the automotive sector, the company continues to introduce new models and expand the depth of cooperation with customers, and the value of bicycles is expected to continue to increase; 3) On the server side, the company focuses on AI servers and cooperates deeply with leading customers in the industry, which is expected to benefit from the construction of A computing power infrastructure. With the completion of the Thai plant in 2025, a large contribution to production capacity may be achieved in 2026. We are optimistic that the company's forward-looking layout in the automotive, server, MR and other fields will contribute to long-term revenue growth.
A target price of $28.1 was given, and the buy rating was maintained
We are optimistic that the company's layout will gradually contribute revenue in the fields of vehicles, servers, MR, etc., and give a net profit forecast of 36.2/41.8/4.75 billion yuan for 24/25/26. The company is leading in global deployment, and AI terminal innovation is expected to drive the volume and price of the company's products to rise sharply. The company will be given 18x PE for 24 years, the target price will be given 28.1 yuan, and the purchase rating will be maintained.
Risk warning: 3C demand falls short of expectations; the pace of commissioning additional production capacity falls short of expectations.