Incident: The company recently released its 2023 annual report, achieving annual revenue of 1.16 billion yuan, +8.7% year over year; net profit to mother of 260 million yuan, +32.5% year over year. Looking at the fourth quarter of a single quarter, the company achieved operating income of 300 million yuan (-5.5%) and realized net profit of 70 million yuan (+8.6%) to mother. In terms of profit level, the company's comprehensive gross margin for the year was 39.6%, +2.0pct year on year, net margin was 22.1%, and +3.9 pct year on year. The gross margin for the fourth quarter of a single quarter was 39.7%, a year-on-year change of -1.0pct. The net margin was 21.9%, and the year-on-year change was +2.8pct.
Metal soft magnetic powder core products are continuously iteratively upgraded, driven by innovation to help the company lead the industry. In '23, the company launched new iron-silicon series magnetic powder cores (NPV, NPC series) and iron-nickel series magnetic powder cores (NPN-LH). The overall market feedback was good, and the market share gradually increased. The company continued to optimize and upgrade the two major series, NPV and NPC, and successfully developed the GPV and GPC series, which will be introduced to the market in 2024, greatly enriching the company's metal soft magnetic powder core product line. The iron silicon 5 generation magnetic powder core to be developed by the company has made breakthrough progress in the laboratory. Its loss characteristics have been further reduced by about 50% compared to the iron silicon 4 generation, which can meet the market demand for higher frequency trends, and will further consolidate the company's leading performance position in the metal soft magnetic powder core industry.
Production and sales of chip inductors were strong, and sales revenue grew rapidly from quarter to quarter. The chip inductor business has now developed into the company's second growth curve. In '23, the company obtained approval and cooperation with semiconductor and system solution providers such as MPS and Infineon. The products were ordered in batches and applied to many of the world's leading GPU chip manufacturers, and sales revenue grew rapidly from quarter to quarter. Chip inductors are expected to continue to grow rapidly in 2024, bringing strong impetus to the company's development.
According to the company's 23 annual report, we made adjustments to the business division scale, and raised the sales price of the electronic component industry product unit and lowered the sales volume of the electronic component industry. The net profit attributable to the parent company in 2024-2026 was 3.75, 4.60, and 554 million yuan, respectively (original forecast value of 388 million yuan in 24). Based on the comparable company's PE valuation 36 times that of 2024, the corresponding target price of 6.768 yuan was maintained.
Risk warning
The risk that production capacity investment in projects under construction falls short of expectations; risk that the price and sales volume of alloy soft magnetic powder cores fall short of expectations; and the risk of a sharp rise in raw material prices.