occurrences
The company released its 2023 annual report. In 2023, the company achieved operating income of 520 million yuan, an increase of 25.41% year on year; net profit to mother was 65 million yuan, an increase of 21.04% year on year.
Key points of investment
The recovery in the downstream market is driving performance growth, and product structure optimization has increased gross profit margin. Driven by the recovery of the consumer electronics market and the increase in orders from downstream customers, the company achieved operating income of 520 million yuan in 2023, an increase of 25.41% year on year; net profit to mother was 65 million yuan, an increase of 21.04% year on year. Among them, in the 2023Q4 single quarter, the company achieved revenue of about 144 million yuan, an increase of 34.32% year on year and a decrease of 8.29% month on month; net profit to mother was 0.18 million yuan, an increase of 255.84% year on year, and a decrease of 18.41% month on month. The company continues to release a variety of new products. The sales revenue of the smartwatch SoC chip series increased as much as three times over the same period last year, and the sales revenue of the Bluetooth speaker SoC chip series grew rapidly. Among them, the sales revenue of low-latency and high-quality wireless audio products doubled. In addition, due to the continuous optimization of the company's product structure, unit sales costs have decreased, and the share of sales of high-margin products has increased. In 2023, the company achieved a gross profit margin of 43.69%, an increase of 4.45 percentage points over the previous year.
Firmly implement the big customer strategy and continuously improve the brand customer penetration rate. The company actively promoted the introduction of leading brand customers at home and abroad in various product lines, and introduced brand customers such as Harman, SONY, Anker Innovation, and Razer into the Bluetooth speaker chip market; introduced Samsung, SONY, Vizio, Hisense, TCL, Polk, DJI, RODE, Mamma, Fengdi, Siberia, and Baseus as the main control chips in the smartwatch market; introduced Xiaomi, Honor, Noise, Fire-Bolt, Titan, Realme, etc. Among various terminal watch models such as Nothing and BoT.
The architecture upgrade enhances low-power end-side AI computing power, and samples are expected to be delivered during the year. The company integrated a low-power AI acceleration engine on the basis of high-end audio chips, upgraded the product architecture to a CPU+DSP+NPU (based on SRAM memory calculation) AI SoC architecture to create low-power end-side AI computing power for end-side intelligent audio and smart wearable products. The company's latest generation of high-end AI audio chips based on SRAM memory calculations is now being released, and it is expected that sample chips will be offered to downstream customers in 2024.
Investment advice
We expect the company to achieve revenue of 676/8.62/1,063 billion yuan in 2024-2026, and realized net profit of 0.90/1.14/147 million yuan respectively. The current stock price corresponding to 2024-2026 PE is 32 times, 26 times, and 20 times, respectively, giving it a “buy” rating.
Risk warning:
Market demand falls short of expectations; new product development and market expansion fall short of expectations; market competition intensifies, etc.