Description of the event
On April 11, 2024, Jingchen Co., Ltd. released the “2023 Annual Report” and the “2024 First Quarter Results Forecast”. In 2023, the company achieved revenue of 5.371 billion yuan, -3.14% year-on-year, and realized net profit of 498 million yuan, or -31.46% year-on-year. In 2023Q4, the company achieved revenue of 1,513 billion yuan, +32.17% YoY, +0.39% month-on-month, and realized net profit of 184 million yuan, +296.79% YoY and +42.82% month-on-month. With 2024Q1, the company expects to achieve revenue of 1,378 billion yuan, +33.12% year over year, and net profit to mother of 125 million yuan, +310.68% year over year.
Incident comments
Returning to an upward channel, revenue continued to grow sequentially from quarter to quarter in '23. In 2023, the company achieved revenue of 5.371 billion yuan, -3.14% year on year, and achieved net profit of 498 million yuan, or -31.46% year on year. The company's gross margin was 36.41%, -0.69pct year on year; in 2023, due to insufficient demand, the company's overall performance was still under pressure. However, judging from the quarterly situation, it is clear that the company is improving quarter by quarter. 2023Q4 achieved revenue of 1,513 billion yuan, +32.17% YoY, +0.39% month-on-month, and achieved net profit of 184 million yuan, +296.79% YoY, and +42.82% month-on-month; in terms of gross margin, 2023Q4's gross margin was 39.08%, +3.37pct YoY, and +3.10pct month-on-month. Process level optimization and cost-side improvements were superimposed on the scale effect, and the company's gross margin continued to grow in the fourth quarter.
New products continued to be developed, and performance increased significantly in the first quarter. With 2024Q1, the company expects to achieve revenue of 1,378 billion yuan, +33.12% year over year, and net profit to mother of 125 million yuan, +310.68% year over year. In the first quarter, the company's diversified product strategy achieved remarkable results. Multiple product lines went hand in hand, and the market share showed a steady growth trend. Among them, T-series chips continued to complete mainstream ecosystem certifications, and sales revenue increased by more than 100% year-on-year. Total revenue for 2024Q2 and the full year is expected to continue to grow year over year.
Various product lines are working together, and the continuous expansion of new products and overseas markets drive long-term growth of S series products. With the continuous increase in the number of overseas operators, the overseas market is expected to become the main driving force for the growth of this series of products; T-series chips have been widely used in smart TVs, smart projectors, smart commercial displays, intelligent conference systems, etc., and the company has cooperated deeply with mainstream global TV ecosystems, and overseas markets have large expansion space and maintained strong growth; A series products have been widely used in many consumer electronics fields, and integrated NPU, DSP and other modules to form Smart SoC chips for diverse application scenarios. W series chips will be further widely compatible and sold with the company's main control SoC platform, and can also be sold independently in the open market; automotive electronic chips have entered many well-known domestic and foreign car companies, and have been successfully mass-produced and commercialized.
Research and development helps new products continue to be launched. In 2023, the company's R&D expenses were 1,283 million yuan, +8.21% year-on-year. 2024Q1's R&D expenses are expected to be 328 million yuan, an increase of 46 million yuan over the previous year. Based on R&D, the company's new products will continue to be launched efficiently.
Recently, the company's first 6nm commercial chip and new Wi-Fi streaming film were successfully produced (three-mode combination Wi-Fi 6+ BT 5.4+802.15.4, which supports Thread/Zigbee, and can be used in mass quantities for terminal products such as Matter controllers and IoT gateways). The 8k chip has successfully passed operator bidding and certification tests, and will be commercialized in batches in the domestic operator market.
The basic market is stable, and the product matrix is perfect to lead future growth. With the improvement of the company's product line, the continuous development of overseas markets, and the continuous development of downstream fields such as AIoT and automobiles, we are optimistic about the company's continued growth under its diverse product layout. We expect net profit attributable to mother for 2024-2026 to be $7.20/10.11/1,338 million, respectively, maintaining a “buy” rating.
Risk warning
1. Market competition increases risk;
2. There is uncertainty about overseas business expansion.