Incident: The company released its 2023 annual report and 2024 quarterly report. It achieved revenue of 793 million yuan, -13.48% year over year; net profit to mother of 101 million yuan, or -46.26% year on year; net profit after deducting non-return to mother 82 million yuan, or -54.12% year on year. 24Q1 achieved revenue of 182 million yuan, +3.82% year over year; net profit to mother was 31 million yuan, +59.56% year over year; net profit without return to mother was 19 million yuan, +30.92% year over year.
The performance was in line with expectations. The decline in the company's revenue in '23 was mainly due to the impact of the global economic environment, and overall demand in downstream markets such as consumer electronics continued to weaken; combined market competition intensified, and product prices fell year-on-year. The year-on-year increase in net profit due to the year-on-year increase in net profit due to the company's receipt of revenue-related government subsidies.
Gross margin declined year-on-year in '23, and the expense ratio fluctuated slightly during the period. 1) Gross profit margin: In 2023, the company's gross margin was 26.17%, -12.21pct year-on-year. The decline in gross margin was mainly due to increased competition in the market. The 24Q1 gross margin was 24.85%, +1.21pct year over year, and -5.74pct month-on-month. 2) Period expenses: The company's expenses rate for the 2023 period was 11.79%, -0.44pct year-on-year. Among them, sales, management, R&D, and financial expenses rates were 1.99%, 7.18%, 4.62%, and -2.00%, -0.06, +0.27, -0.90, and +0.26pct year-on-year.
Promote the development of high-end products such as high-frequency, miniaturization, vehicle specifications, and engineering standards, and continue to seize domestic market share. 1) Technology research and development: Achieve mass production of 76.8, 80, 96, 125, 156.25, 212, 285 MHz ultra-high frequency and ultra-small size products, and have 300 MHz high base frequency processing capability; promote trial production and mass production of high-performance chips such as vehicle grade (high safety level), RTC (high accuracy, reliability, high stability) chips, industrial grade (high temperature requirements), etc., to enhance new quality productivity. 2) Market development aspect: Guided by customer demand, increase customer development efforts, increase market penetration of existing customers; at the same time expand new application scenarios, increase the penetration of leading customers in the Internet of Things, automotive electronics, industrial control, electricity, Beidou, etc., and actively lay out demand development and large-scale applications for UHF and high-stability products in potential markets such as 5G, WIFI6, optical communication, ICT, edge computing, and AI to increase market share.
Profit forecast: We expect net profit to be 1.33, 1.84, and 222 million yuan respectively in 2024-26, maintaining a “buy” rating.
Risk warning: Demand recovery in the consumer electronics sector falls short of expectations; industry competition heightens risks, etc.