Lexin Technology released its 2024 quarterly report. Revenue continued to grow year on year, and profit increased significantly year on year. The company's inventory reached a healthy level and returned to a normal preparation cycle. The product range continues to expand, and many new products will also enter a period of high growth in 2024. Along with a marginal recovery in downstream consumer demand, the company's annual revenue and profit are expected to grow rapidly year-on-year. Maintain an “Overweight” rating.
24Q1 revenue continued to grow year over year, and profitability improved significantly. The 24Q1 company's revenue was 387 million yuan, +21.7% YoY /-4.7%, and continued to grow year on year since 23Q1; gross profit margin of 41.9%, +1.2pcts/month-on-month +1.9pcts; net profit to mother of 54 million yuan, +73.4% /month-on-month +10%; net profit after deducting non-net profit of $48 million, +88.6% YoY/+17.8%; net profit after excluding share payments, net profit of 60 million yuan, +78.9% YoY; after deducting non-net interest rate of 12.4%, YoY +4.4pcts/ +2.36pcts month-on-month.
The company's revenue grew steadily year on year, mainly due to the continuous expansion of the C3/C2/S3 product line, and new and old customers all contributed to the increase; the company's profit growth rate was significantly higher than the revenue growth rate, mainly due to the increase in gross margin while the scale effect was further evident.
24Q1 chip revenue grew at a high year-on-year rate, and the gross margin of chips and modules was relatively stable year-on-year. 24Q1 chip revenue was 168 million yuan, +54% YoY/-6.4% month-on-month. The company's chips were mainly aimed at domestic customers, with a high year-on-year increase in demand for some new categories. The gross profit margin was 47.1%, -1.3 pcts/month-on-month +0.1 pct, and gross margin declined slightly year-on-year due to exchange rate fluctuations; module revenue was 220 million yuan, +6.8% YoY/-2% month-on-month, gross profit margin 38.1%, +1.3 pcts month-on-month.
Demand in the consumer industry continued to improve marginally, and the company resumed normal preparation cycle. As of 24Q1, the company's inventory was 283 million yuan, an increase of 40 million yuan over the previous month. Downstream demand is growing rapidly due to the company's development of new businesses and new customers. Currently, the company has no further pressure to remove inventory, and has resumed a normal preparation cycle this year. Inventory is at a healthy level.
The company continues to expand its product categories, and many new products are expected to enter a period of high growth in 2024. 1) New products such as C3 and S3 will be rapidly released in 2023, and are expected to continue to grow in 2024; the C6 released by the company in 2021 is the first dual-core SoC that supports WiFi6, has higher transmission efficiency and lower power consumption, and is expected to enter a period of high growth this year; 2) The H series is also expected to gradually launch this year. The company's H2 products were released in 2021, integrating IEEE 802.15.4 and Bluetooth 5.0 technology in the 2.6 GHz band; the company also recently released new H4 products, in terms of power consumption, Significant upgrades have been made in terms of connectivity performance and memory expansion capabilities, marking a major technological breakthrough in the field of self-developed low-power Bluetooth chips; 3) The new dual-core 400MHz SoC P4 product was successfully released. It has now completed streaming and is about to be marketed. P4 can meet the high-performance computing needs of multiple IO, HMI and AIOT applications, and enhance the company's layout in application scenarios such as cameras, screens, and AI processing.
Investment advice. The company's revenue in a single quarter continued to grow year on year, and 24Q1 profit increased significantly year on year. Along with a marginal recovery in downstream consumer demand, the company's category expansion and new product release, we are optimistic about the company's rapid revenue and profit growth trend in 2024. We expect the company's revenue for 2024/2025/2026 to be 17.6/22.1/2.71 billion yuan, and net profit to mother will be 1.9/2.5/330 million yuan, respectively, corresponding PE of 41.4/31.1/23.6 times, maintaining the “increase” rating.
Risk warning: Risks that demand recovery falls short of expectations, product development progress falls short of expectations, intelligent penetration rate increases less than expected, new product release falls short of expectations, and industry competition intensifies.