Revenue and gross margin declined slightly year-on-year in 2023, and net profit was greatly affected by expenses. The company released its annual report. In 2023, it achieved revenue of 5.371 billion yuan (YoY -3.1%), net profit to mother of 498 million yuan (YoY -31.5%), net profit of 385 million yuan (YoY -42.4.0%), and gross margin of 36.4% (YoY -0.7pct). Among them, the impact of equity incentives on net profit due to mother for the whole year was 158 million yuan. Excluding the impact on share payments mentioned above, net profit returned to mother was approximately 656 million yuan in 2023.
In 1Q24, revenue increased 33% year over year, and net profit to mother increased 311% year over year. The company released a performance forecast. In 1Q24, it achieved revenue of about 1,378 million yuan (YoY +33.1%), net profit due to mother of 125 million yuan (YoY +310.7%), net profit of 117 million yuan (YoY +391.0%), and R&D expenses of about 328 million yuan, an increase of about 46 million yuan over the same period last year. The impact of 1Q24 equity incentives on net profit to mother was approximately RMB 37 million. Excluding the impact on share payments mentioned above, the net profit of 1Q24 was approximately RMB 166 million. The company expects further year-on-year revenue growth for 2Q24 and the full year.
In 2023, 134 million chips were sold, and Wi-Fi chip shipments increased dramatically. Achieved chip sales of 134 million units (YoY -5.11%) in 2023, of which 125 million multimedia smart terminal chips were sold (YoY -9.6%), achieving sales revenue of 5.292 billion yuan (YoY -4.2%), gross profit margin 36.5% (YoY 0.58pct); sales volume of other chips was 8.79 million units (YoY +219.0%), achieving sales revenue of 79 million yuan (YoY +242.8%), with a gross profit margin of 27.43% (YoY -5.8pct), mainly Shipments of Wi-Fi chips are rising.
R&D investment continues to increase, and we continue to increase our share of the global market with high-quality customers and new products. In 2024, the company spent 1,283 billion yuan on R&D (YoY +8.27%), and the number of R&D personnel increased by about 99 over the same period last year. The results of intensive R&D investment are gradually showing: Recently, the first 6nm commercial chip streaming was successful, and the new Wi-Fi product was successfully streamed (three-mode combination Wi-Fi 6+BT 5.4+802.15.4, supporting Thread/Zigbee, which can be used in terminal products such as Matter controllers, IoT gateways, etc.). The 8k chip has successfully passed operator bidding and certification tests, and is about to be commercialized in batches in the domestic operator market. As overall demand in the consumer electronics market continues to pick up, new incremental markets continue to expand, and sales of new products expand, the company's operations will continue to improve with an expanding global high-quality customer base and increasing customer stickiness.
Investment advice: China's leading smart terminal SoC design company to maintain a “buy” rating.
We expect the company's revenue in 2024-2026 to 6460/79.562 billion yuan (2024-2025 pre-value: 68.12/8.568 billion yuan), and net profit to mother 7.65/11.44/1,677 billion yuan (2024-2025 previous value 778/1,249 million yuan). The current stock price corresponds to 27.3 times PE in 2024, maintaining a “buy” rating.
Risk warning: demand falls short of expectations; new product development and introduction falls short of expectations, etc.