occurrences
The company issued a voluntary disclosure notice for the 2023 annual report and the results forecast for the first quarter of '24. For the full year of 2023, the company achieved operating income of 5.371 billion yuan, a year-on-year decrease of 3.14%; realized net profit of 498 million yuan, a year-on-year decrease of 31.46%. Among them, the company achieved operating income of 1,513 billion yuan in a single quarter of 2023, up 32.17% year on year and 0.39% month on month; realized net profit of 184 million yuan, up 296.79% year on year, and 42.82% month on month.
In 2024 Q1, the company is expected to achieve operating income of about 1,378 million yuan, an increase of about 33.12% over the previous year, and a net profit of about 125 million yuan to mother, an increase of about 310.68% over the previous year.
Key points of investment
Results improved quarterly in '23, and high growth is expected in 24Q1. Since 2023, the company has gradually escaped the impact of the industry's downward cycle. Since Q2 2023, it has achieved three consecutive quarters of month-on-month revenue growth, and achieved revenue of 3.20 billion yuan in the second half of the year, reaching a record high for the same period. The company's gross margin continued to improve. In the Q4 2023 quarter, the company achieved a gross sales margin of 39.08%, an increase of 3.10 percentage points over the previous quarter. In 2024 Q1, the company is expected to achieve operating income of about 1,378 million yuan, an increase of about 33.12% over the previous year, and a net profit of about 125 million yuan to mother, an increase of about 310.68% over the previous year. Excluding the impact of share payment fees, the company is expected to achieve net profit of around 166 million yuan in Q1 of 2024. With the gradual recovery of the market, as well as the company's continued development of new markets and the continuous commercialization of new products, the company expects further year-on-year revenue growth in Q2 2024 and the full year of 2024.
High-intensity R&D investment is at the bottom, and new products continue to be iterated and released. During the reporting period, the company incurred R&D expenses of 1,283 billion yuan, an increase of 8.21% over the previous year, and the number of R&D personnel increased by 99 over the same period last year.
The company is actively expanding the market and achieving mass production of multi-line products. Subsequent new products will be launched, which is expected to continue to provide new growth impetus for the company: 1) S series: The company released an 8K ultra-high-definition SoC chip and successfully passed the operator's tender certification test. The chip integrates a 64-bit multi-core central processor and a self-developed neural network processor to support 8Kp60 video decoding functions in mainstream video formats around the world. 2) T series: The company continues to break through the mainstream smart TV ecosystem certification, and sales revenue increased quarter by quarter. In terms of new products, the company launched a new generation of T-series high-end chips, using a 12nm FinFET process, which supports up to 8K hardware decoding and 4K144 Hz output. The company is expected to continue introducing new products in 2024. 3) A series: The company has passed Google's EDLA enterprise-level ecological certification. The fields of application include but are not limited to large-screen commercial display tablets, large-scale all-in-one conference machines, advertising machines, educational tablets, etc. The application fields of the company's chips will be further enriched and expanded in the future. 4) W series: The company has launched the first-generation and second-generation self-developed high-speed digital Wi-Fi Bluetooth 2-in-1 integrated chips. Among them, second-generation Wi-Fi Bluetooth chips (Wi-Fi 6 2T2R, BT 5.4) were mass-produced and commercialized in August 2023. In 2024, the company will launch a new three-mode combination product (WiFi6+BT 5.4.+802.15.4), which supports Thread/Zigbee and can be used in terminal products such as Matter controllers and IoT gateways. In the future, the company's wireless product line is expected to enter a new fast track as W-series chips are adapted and sold in conjunction with the company's main control SoC platform, and sold independently to the open market. 5) Automotive electronic chips: Gradually penetrating from high-priced models to mid-range and low-cost models, models equipped with the company's pre-installed car-grade smart cockpit chips will be mass-produced, commercialized, and overseas in 2023.
Investment advice
We expect the company to achieve revenue of 64.10/78.32/9.415 billion yuan in 2024-2026, and realized net profit of 7.13/9.90/1,248 billion yuan respectively. The current stock price corresponding to 2024-2026 PE is 31 times, 22 times, and 18 times, respectively, giving it a “buy” rating.
Risk warning:
Downstream demand falls short of expectations; the recovery of industry sentiment falls short of expectations; the company's technology and product iterations fall short of expectations; industry competition intensifies, etc.