First-quarter revenue increased 72% year over year. The company is a scarce domestic optical communication chip company. In 2023, the company achieved revenue of 140 million yuan, a year-on-year decrease of 49.0%; realized net profit to mother of 19.48 million yuan, a year-on-year decrease of 80.6%. The comprehensive gross profit margin for the whole year was 41.9%, down 20.0pct year on year. The company's performance in 2023 is under pressure, mainly due to the slowdown in customer inventory and terminal operator construction in the telecommunications market, intense price competition in the domestic market affecting gross margin, and the decline in demand in the traditional cloud computing digital communication market.
In the first quarter of 2024, the company achieved operating income of 6.06 million yuan, a year-on-year increase of 72.3%, and a year-on-year increase of 17.3%; realized net profit of 10.53 million yuan, a year-on-year decrease of 11.1%, mainly due to the company receiving 6.69 million yuan in government subsidies in the same period last year; net profit deducted from non-mother of 9.57 million yuan, an increase of 109.7% year on year. The company's revenue recovered month-on-month in the first quarter, benefiting from the recovery in industry demand and the further expansion of 10G EML products.
Broadband market, 10G EML acceleration contribution, 25G/50G product forward-looking layout. In the optical fiber access market, the company's 10G EML has been shipped in batches and gradually released, driving revenue recovery in the first quarter compared to the same period last month. In the field of research and development, the company has continuously optimized and upgraded 10G EML products, and tested 10G DFB products with differentiated solutions to customers; for next-generation 25G/50G PON optical networks, the company has developed and tested related ONU and OLT end optical chip products to customers.
The digital communication market has welcomed AI opportunities, and 100G EML and CW light sources are progressing smoothly. The company continues to cultivate in the field of high-end optical chips and actively promotes EML chips and CW light source products for high-speed optical modules. Specifically, in 2023, the company completed the development, design and finalization of products such as 100G PAM4 EML, 70mW/100mW high-power CW chips, and sent samples to the client. Currently, related tests are progressing smoothly. The company has initially completed performance development and in-factory testing of 200G PAM4 EML, and is continuing to optimize. In terms of production capacity, the company has expanded a number of EML chip production equipment and development equipment. AI is driving demand for high-speed optical modules, and the supply of supporting high-speed optical chips continues to be tight, and the company is expected to benefit from domestic replacement opportunities for optical chips.
Risk warning: broadband market demand recovery and AI market demand fall short of expectations; progress of new products falls short of expectations; customer certification progress falls short of expectations; competition intensifies.
Investment advice: Maintain profit forecasts and maintain no ratings.
Maintaining the company's profit forecast for 2024-2025 and adding a profit forecast for 2026, the company's net profit for 2024-2026 is expected to be 0.6/100/150 million, respectively, and the corresponding PE is 194/119/78 times, respectively. The company is a scarce optical communication chip company in China. High-speed EML chips and CW light source clients are actively promoted in the digital communication market, which is expected to benefit from the dividend of demand for high-speed optical modules; 10G EML is accelerating in the telecom market, and 25G/50G PON products with forward-looking layout are expected to benefit from the next generation of optical fiber access network upgrades. No ratings have been given to the company yet, so please follow.