Event: Company releases 2023 annual report
The company's performance in 2023 is under pressure, waiting for new business expansion in Shaoguan: the company achieved revenue of 1.09 billion yuan in the full year of 2023, of which revenue from flash memory application products was 730 million yuan, -28.8% year-on-year, and revenue from flash memory control chips and other businesses was 670 million yuan, or -50.8% year-on-year. On the profit side, net profit attributable to mother was -40 million yuan, -170.4% year on year; net profit without return to mother was 50 million yuan, -218.6% year on year; gross profit margin 9.3%, -1.01 pct year on year. Mainly factor 1) The decline in revenue is mainly due to an imbalance in oversupply caused by poor terminal demand and high corporate inventories since 2022H2, and the prices of storage products have continued to fall. 2) In 2023, the company's housing rental revenue, patent revenue, and government subsidies declined year-on-year, resulting in a decrease in net profit compared to the same period last year. 3) Affected by the preparation of new business, the cost rate increased: in 2023, the company's sales/management/ R&D expenses were 6.3%/5.7%/1.6%, respectively, +3.4/+3.7/-0.9pcts; in addition, the company carried out detailed accounting of R&D expenses, and some non-full-time R&D personnel were reclassified to sales/management expenses.
The product continues to innovate and upgrade, and has been widely recognized by the market. In February 2023, Z RGB DDR5 was released, focusing on beautiful appearance and large capacity; in March, the SSD Tool Box was officially released, which can monitor and manage the status of the hard drive in all aspects; in June, the company launched a new Zhuying NV7000-t solid-state drive with a read and write speed of up to 7300MB/s, which supports intelligent temperature control technology; in July, the company launched the PCLE4.0SSD solution, which uses Turner Fly main control and long-life particles, which has a wide range of compatibility and faster reading and writing speed; in February 2024, the company launched the CF2000 A memory card specially designed for scenes such as high-speed photography and travel photography. The company's products are widely recognized. Z RGB DDR5 won the 2023 Black Gold Award for its stylish appearance and excellent performance; the NV7000-t won the Zhongguancun Online 2023 Recommended Product Award.
Multi-party cooperation in the industry chain, optimistic about the company's long-term growth based on the Shaoguan data center layout: in May 2023, the company signed a framework agreement to cooperate in the development and production of AI intelligent computing equipment and overall solutions to expand Lanco's product line and enhance the competitiveness of the industry; in August, Shaoguan Langzheng Data Semiconductor Co., Ltd., a joint venture established by the company and Shaoguan Chuangxinyuan Technology Co., Ltd. was officially put into operation to provide various storage packaging products such as Flash BGA, TF cards, USB drives, eMMC, and eMCP; in August, it carried out in-depth strategic cooperation with Alibaba Cloud Discuss to drive the company to new heights in technology research and development, brand building, etc. In February 2024, the company signed a cooperation agreement with ZTE and other parties to cooperate in building a computing power industry ecosystem, improving the level of data center construction, and in-depth cooperation in digital transformation; in March, it signed a framework agreement with Yiheng Chuangyuan and other parties to announce participation in the construction of the Guangdong-Hong Kong-Macao storage base project to intervene in enterprise-grade SSD products. The company relies on the Shaoguan State-owned Assets Administration Commission and is also a local storage manufacturer in Shaoguan City, and continues to lay out the upstream and downstream industrial chains around the Shaoguan Data Center Industrial Cluster.
Profit forecast and investment rating: We are optimistic about the company's construction of the data center industry cluster in Shaoguan and the layout of the domestic replacement process in the industry-level storage market. We maintain the 24/25 profit forecast and add a 26-year profit forecast for the company. The company's net profit for 2024-2026 is 0.7/1.1/180 million yuan, respectively. The company's current market value is 80/50/32 times PE for 24/25/26, maintaining a “buy” rating.
Risk warning: supply chain risk, technology innovation and product renewal risk, product market competition risk.