24Q1 revenue increased 19% month-on-month, net profit to mother turned month-on-month loss into profit, and profitability improved markedly.
The company's revenue in 2023 was 5.761 billion yuan, down 29.14% year on year, net profit to mother was 161 million yuan, down 92.15% year on year, net profit after deducting non-return to mother was 0.27 million yuan, down 98.57% year on year. The year-on-year decline in net profit due to falling product prices caused gross margin to drop 13.24 pct to 34.42% year on year in '23.
24Q1 revenue for a single quarter was 1,627 billion yuan, up 19.10% month-on-month, with net profit due to mother of 205 million yuan, turning a month-on-month profit of 184 million yuan, turning a month-on-month loss into a profit; gross profit margin of 38.16%, an increase of 3.61 pct month-on-month, a net profit margin of 12.58%. The increase in gross margin showed a recovery in ASP, and net profit to mother also benefited from a decrease in inventory impairment losses.
The three major products ASP have reached or reached the bottom by 23Q4, and we continue to monitor the rebound in niche storage prices.
By product in '23, (1) memory chips: revenue was 4,077 billion yuan, down 16% year on year, gross profit margin was 32.99%, down 7.10 pct year on year. Shipments of Nor Flash, SLC NAND, and self-developed DDR3L 2Gb/4Gb all increased year over year, and the year-on-year decline in revenue was due to ASP falling 28% year over year. Niche storage prices have rebounded since the end of 23Q3, and samples of 8Gb DDR4 are expected to be launched in '24, and revenue in the memory chip sector is expected to grow. (2) Microcontroller: Revenue of 1,317 billion yuan, down 53% year on year, gross profit margin of 43.10%, down 21.76pct year on year, mainly due to increased industry competition, ASP fell sharply by 44% year on year, but 23Q4 MCU revenue showed signs of stabilizing month-on-month. At present, the automotive MCU has successfully cooperated with leading domestic Tier 1 companies to develop products, such as Atech body control zones, Baolong Technology tire pressure monitoring systems, and is also cooperating with a number of leading international companies. (3) Sensors: Revenue of 352 million yuan, down 19% year on year, gross profit margin was 16.00%, down 0.36 pct year on year. The company's market share in the sensor field increased in '23.
The amount of DRAM-related transactions is expected to be +135% year-on-year in '24, and equity incentives show confidence in the company's growth.
On April 20, the company issued the “Notice Concerning the Estimated Amount of Daily Related Transactions in 2024”. It is estimated that the DRAM transaction amount purchased from Changxin Storage in 2024 is 120 million US dollars, or about 852 million yuan, a significant increase of 135% over the previous year. At the same time, the “2024 Stock Options Incentive Plan (Draft)” was announced, which proposes to grant 6.7814 million stock options, accounting for 1.02% of the total share capital. The revenue targets corresponding to equity incentives for 24 to 27 years are 72.94/86.20/98.00/11.800 billion yuan, respectively. The corresponding year-on-year revenue growth rates are 27%/18%/14%/20%, respectively, demonstrating the company's confidence in future development.
“MCU+Storage+Sensor” three-wheel drive, maintaining the “Overweight” rating.
The company's Serial Nor Flash market share is second in the world (2023), the MCU is seventh (2022), and self-developed DRAM is growing rapidly. The net profit for 24-26 is estimated to be 10.45/14.12/1,845 billion yuan, respectively, corresponding to PE 62.3/46.1/35.3 times in 24/25/26, maintaining the “gain” rating.
Risk warning: industry fluctuation risk; supply chain risk; brain loss risk; exchange profit and loss risk, etc.