Incident: On April 12, Jingchen Co., Ltd. released its 2023 annual report and 1Q24 performance forecast. In 2023, the company achieved operating income of 5.371 billion yuan, a year-on-year decrease of 3.14%; net profit attributable to owners of the parent company was 498 million yuan, a year-on-year decrease of 31.46%; net profit attributable to owners of the parent company after deducting non-recurring profit and loss was 385 million yuan, a year-on-year decrease of 42.39%. Among them, revenue for the fourth quarter was 1,513 billion yuan, up 32.17% year on year, and net profit to mother for the fourth quarter was 184 million yuan, up 296.79% year on year. The first quarter of 2024 is expected to achieve operating income of about 1,378 billion yuan, an increase of about 33.12%; net profit attributable to owners of the parent company is about 125 million yuan, an increase of about 310.68% year on year; net profit attributable to owners of the parent company after deducting non-recurring profit and loss is about 117 million yuan, an increase of about 390.97% year on year.
Performance picked up rapidly, and profitability continued to improve. The company's diversified product strategy achieved remarkable results. Market share increased steadily, and gross margin continued to improve. 4Q23, the company's gross sales margin was 39.08%, an increase of 8.62 pct over the previous month. In terms of cost ratio, 1Q24's R&D expenses were about 328 million yuan, an increase of about 16.3% over the previous year. The company's revenue has been rising steadily, and the increase in expenses has stabilized, driving the company's profit to grow rapidly. Net profit after deducting non-return to mother in 1Q24 increased by about 310.68% year-on-year. As new markets continue to be developed and new products continue to be commercialized, the company's performance is expected to continue to improve in 2024.
Research and development continues to advance, and the pace of new product release is smooth. In 2023, the company invested 1,283 billion yuan in R&D expenses, an increase of 8.18% over the previous year, and the number of R&D personnel increased by 99 to promote the smooth progress of the company's new SoC products: 1) S series: The company's 8K ultra-high-definition SoC chip successfully passed the operator's bidding and certification tests and will soon enter mass commercial use. 2) T series: The chip continues to break through the mainstream smart TV ecosystem certification, and sales continue to grow rapidly. 3) W series: A new generation of Wi-Fi Bluetooth chips (Wi-Fi 6 2T2R, BT 5.4) will be mass-produced and commercialized in August 2023, and a new three-mode combination product (Wi-Fi 6+BT 5.4) will also be launched in 2024.
+802.15.4) can give terminal products applications such as Matter controllers and IoT gateways, and drive the wireless connectivity chip business into a new rapid development channel. 4) Automotive electronic chips: They have gradually penetrated from high-priced models to mid-range and low-cost models, and front-loaded smart cockpit chips have been mass-produced and commercialized on a large scale and launched overseas.
Provide multi-platform solutions to expand the high-quality customer base. The company has rich experience in full-process SoC design. Through cost, performance and power optimization, the company provides complete system solutions based on various open platforms to help global operators, OEMs, ODMs and other customers quickly deploy the market. S-series solutions have been widely used by many well-known domestic and foreign manufacturers such as ZTE, Skyworth, Xiaomi, Alibaba, Google, Amazon, etc. T-series customers include well-known companies such as Xiaomi, Haier, TCL, Skyworth, and Hisense. A-series chips are used in terminal products of companies such as Hisense, Xiaomi, TCL, and Samsung. With the launch of new products, the company will expand the global high-quality customer base, enhance customer stickiness, and achieve the company's sustainable development.
Investment advice: We expect the company's net profit to be 726/10.22/1,256 million yuan respectively in 24/25/26, up 45.8%/40.7%/23.0% year-on-year, corresponding to current PE price 28/20/16 times. The company's performance resumed growth, overseas market expansion was smooth, new products continued to be released, and the “recommended” rating was maintained.
Risk warning: Downstream demand falls short of expectations; market competition intensifies; risk of new product development falling short of expectations.