The revenue growth rate increased significantly in March, and revenue increased month-on-month in the fourth quarter. The company's revenue in March increased 17% year over year to 2.25 billion yuan, a significant increase compared with the January growth rate. In '23, we achieved revenue of 32.1 billion yuan, down 11% year on year, net profit to mother of 3.29 billion yuan, down 34% year on year; gross profit margin was 21.3%, down about 3 pct year on year. At the end of '23, industry demand recovered. The company's 23Q4 revenue in a single quarter was 11.6 billion yuan, up about 2% year on year, up 30% month on month, and net profit to mother was 1.44 billion yuan, down about 17% year on year and up 40% month on month.
The communication board business bucked the trend, and consumer electronics and computer boards declined. The communication board business is the company's main business. Facing a severe market environment in '23, the communication board business still achieved revenue of 235 billion yuan, an increase of about 4% over the previous year, a gross profit margin of 21%, and a slight decrease of 1 pct from the previous year. Driven by new products such as AI phones and folding phones, global smart phone shipments are expected to pick up in '24; revenue from the consumer electronics and computer board business fell nearly 40% to 7.98 billion yuan in '23, and Apple computer shipments increased 15% year-on-year in 24Q1, which is expected to drive the company's performance to improve. The implementation of AI functions in terminals is mainly software upgrades in the short term. In the medium to long term, it will drive hardware upgrades, increase requirements for PCB precision, heat dissipation, and battery life, bringing development opportunities to the company.
The revenue of automotive and server boards has increased dramatically, and there is plenty of room for development. The company achieved revenue of 539 million yuan for automobiles, server boards and other boards in '23, an increase of 71% over the previous year. The company is expanding its layout in the field of smart cars and servers. Among them, in the automotive sector, radar operation boards, lidar and radar high-frequency antenna boards have been mass-produced; in the server field, the company lays out AI server requirements to continuously improve HDI capabilities for thick boards, and the main production product board level has been upgraded to 16 to 20L or more. In January '24, the company won the AMD “Partner Excellence Award” and became the only PCB manufacturer to receive this award. At the same time, it also received the “AMD EPYC Outstanding Contribution Award”, and certification programs with mainstream domestic server suppliers began as scheduled. The company is promoting the construction of a factory in Thailand. The first phase of the project focuses on automotive server products. It is expected to be put into operation in 25 years, bringing new room for growth. The company's technical reserves for optical module products are also expected to benefit from AI trends.
We forecast that the company's earnings per share for 24-26 will be $1.63/1.87/2.14 respectively (the original 24-25 forecast was $2.11/2.36, which mainly lowered communication board revenue, consumer electronics and computer board revenue and gross profit margin). Based on comparable companies' 24-year PE valuation level of 21 times, corresponding to a target price of $34.23, the corresponding target price of $34.23 was maintained.
Risk warning
Large customers account for relatively high risks; risk of rising raw material prices; risk of R&D or production capacity falling short of expectations; risk of exchange rate changes.