Kun Heng Shunwei released the 2023 Annual Report and the First Quarter 2023 Report. On April 21, 2024, Kun Heng Shunwei released the 2023 Annual Report and the 2024 First Quarter Report. In 2023, revenue was 250 million yuan, up 15.1% year on year; net profit to mother increased by 90 million yuan, up 7.2% year on year. Looking at a single quarter, 4Q23 revenue was 90 million yuan, down 10.1% year on year; net profit to mother increased by 0.3 billion yuan, down 24.2% year on year. The 1Q24 company achieved revenue of 0.2 billion yuan, an increase of 28.7% over the previous year; net profit to mother was 3,035 million yuan, an increase of 10.8% over the previous year.
The core product matrix has been gradually improved, and the market share has steadily increased. The company's business performance continued to grow in 2023. The main factors were as follows: the core product matrix was gradually improved, and the competitive advantage of the company's leading product, wireless channel simulators, continued to stand out. As comprehensive performance and functions continued to be iterated, important breakthroughs were gradually formed in markets such as satellite communications and semiconductor testing; new products were gradually introduced for testing and trial use by downstream users, and certain orders were formed; and the performance of general receivers and other products under the HBI architecture gradually reached the level of overseas competition. Industry solutions continue to be rich. With the continuous enrichment of the company's product matrix and the accumulation of industry applications, the advantages of the company's system-level solutions are obvious. They have been continuously expanded from radio test simulation to simulation solutions such as simulation training, etc., to better meet the testing and simulation needs of general units in various industries and customers in various field application scenarios.
Breakthroughs have been made in R&D technology, and the product matrix continues to be rich. In 2023, the company's R&D expenses were 60 million yuan, a year-on-year increase of 62.73%, and R&D investment accounted for 22.38% of revenue. While upgrading and iterating the existing series of products, the R&D center continues to carry out new technology engineering and commercialization research, laying the foundation for breakthroughs in core product functions and performance. In 2023, the company's wireless channel simulator product line developed wireless channel simulation products with greater bandwidth and better interoperability. At the same time, the company continues to conduct research on simulation testing technology in related fields, enriching the simulation application of products in satellite communications. The company continues to increase investment in R&D. Existing products continue to be iterated and rich in functions to ensure the core competitive advantage of the company's products, investment in new products ensures a continuous source of new business for the company in the future, and the company's product matrix continues to be enriched.
Cultivating talents in various fields, highlighting professional advantages. The company focuses on cultivating all kinds of talents needed in the field of radio simulation testing, and has established a stable R&D team with professional technical capabilities that can understand market development needs and quickly commercialize. The team's technicians have now become professionals in system architecture design, algorithm research, core signal processing firmware design, and product structure design in the field of radio equipment testing and simulation.
The company's core technicians have more than 10 years of industry experience and participated in the development of Chang'e lunar radar ground simulation test equipment, mobile communication 5G base station collection test simulation verification equipment, etc.
Investment suggestions: Benefiting from large-scale applications of 5G-related communication equipment (such as base stations, mobile phones), the Internet of Things, and the Internet of Vehicles, etc., considering the continued growth in the market share of the company's core products and the gradual expansion of new products, we expect the company's revenue to be 3.3/44/5.6 billion yuan in 24-26, respectively, and net profit to mother of 1.13/1.46/196 million yuan, corresponding to the closing price on April 22, 2024. P/E is 26x/20x/15x, respectively, maintaining the “recommended” rating.
Risk warning: Downstream demand falls short of expectations, and new product release progress falls short of expectations.