24Q1 profit increased significantly, and profit margins increased significantly from month to month. 2023: Achieved revenue of 5.76 billion yuan, yoy -29.1%, net profit to mother of 160 million yuan, yoy -92.2%, net profit after deducting non-return to mother of 0.27 million yuan, yoy -98.6%, gross profit margin of 34.4%, year-on-year -13.2%, net interest rate to mother 2.8%, YoY -22.5% year-on-year. 24Q1: Achieved revenue of 1.63 billion yuan, +21.3% year-on-month, and realized net profit of 210 million yuan, +36.5% year-on-year, and significantly reversed losses from month to month (23Q4 net profit - 273 million yuan).
Achieved a gross sales margin of 38.2%, -0.09pcts year-on-year, and +3.62pcts month-on-month. Achieved a net sales margin of 12.6%, +1.39pcts year-on-year, and +32.5pcts month-on-month. 24Q1 R&D expenses were 290 million yuan, +28.7% year-on-year. Inventory depreciated by $34 million in 24Q1, with significant year-on-year decreases ($55 million in 23Q1).
The second largest NOR Flash manufacturer in the world, the product matrix continues to improve! The company's product shipments in 23 reached 3.122 billion units, an increase of 12.98% over the previous year. Among them, NOR shipments reached a record high of 2,533 billion units in 23, achieving a 16.15% increase, and cumulative NOR shipments reached 212 billion units. The company is already the second largest NOR Flash manufacturer in the world, and its product matrix continues to be rich, providing product choices of up to 16 capacities (up to 2Gb), four different voltage ranges, and up to 20 different package options.
The DRAM product release cycle is increasing, and the volume and price are expected to rise sharply in 24 years! Market expansion results have been remarkable in 23 years. The total number of customers sold has steadily increased, and shipments of DDR3L 2Gb and 4Gb products have continued to increase. The company continues to enrich its self-developed DRAM product portfolio. The DDR3L can provide 1/2/4Gb, DDR4 can provide 4Gb capacity, and continues to promote other self-developed products in the plan. With a niche DRAM market size of 10 billion US dollars, the company's DRAM product portfolio expansion in the upward cycle is expected to see a sharp rise in volume and price!
High-performance MCUs continue to lead the way, waiting for demand to reverse. GigaYi is a leading manufacturer of 32-bit MCU products in China. The GD32 series has more than 600 models. It is widely used in mainstream application markets such as general purpose, low cost, high performance, low power consumption, wireless connectivity, etc., to achieve full coverage of the 110nm-22nm process. Heavy materials such as GD32H and GD32A are widely recognized in the ML/AI and smart car fields respectively.
Equity incentives demonstrate confidence in long-term growth. The company released a draft equity incentive plan for 24 years. It plans to grant 6.7814 million stock options to incentive recipients, including 45 core executives and key executives. The 2024/2025/2026/2027 annual performance assessment targets are 72.9/86.2/98.0/11.80 billion yuan, respectively. The corresponding year-on-year growth rate of each year's results is 26.6%/18.2%/13.7%/20.4%, corresponding to 2023-2027 revenue agr of 15.4%.
Profit forecast and investment suggestions: We see that the company, as a leading domestic niche storage leader, is still actively promoting the further improvement of its product line, and its core competitiveness continues to be strengthened. The niche storage sector has reached an inflection point, and the company's NOR and SLC business is expected to continue to rise. At the same time, the DRAM business is expected to experience significant growth through accumulation, driving the company's performance to achieve better growth in the upward cycle of the sector. The company is expected to achieve revenue of 72.0/95.8/11.97 billion yuan in 2024/2025/2026, corresponding growth rate of 25.0%/33.0%/25.0%. The company is expected to achieve net profit of 12.1/19.1/2.54 billion yuan in 2024/2025/2026, corresponding growth rate of 653.4%/57.2%/32.9%, corresponding to 2024/2025/2026 PE valuations of 40.7/25.9/19.5x, respectively, maintaining the “Highly Recommended” rating.
Risk warning: Downstream demand falls short of expectations, R&D progress falls short of expectations, and industry competition intensifies.