发展趋势2023&1Q24 results are basically in line with the market and our expectations
Sanan Optoelectronics released its 2023 annual report: 2023 revenue of 14.053 billion yuan, YoY +6.28%, net profit to mother of 367 million yuan, YoY -46.50%, net profit of non-return to mother - 1,088 million yuan, previous value - 310 million yuan. Basically in line with the market and our expectations.
The company released its report for the first quarter of 2024:1Q24 revenue of 3.557 billion yuan, YoY +22.33%, net profit to mother of 119 million yuan, YoY -44.39%, net profit of non-return to mother of -32 million yuan, reduced year-on-year loss. Basically in line with the market and our expectations.
Development trends
In 2023, LED epitaxial chip revenue was 5.665 billion yuan, YoY +6.30%, of which traditional LED epitaxial chip revenue YoY +3.91%, and high-end LED epitaxial chip revenue YoY +13.99%. Demand in the 2H23 LED industry has gradually recovered, the company's production capacity utilization rate has gradually increased, sales have increased year-on-year, and prices have recovered to a certain extent. LED application revenue was 2,231 billion yuan, YoY +0.83%, of which Anrui Optoelectronics (automotive lights) earned 2.03 billion yuan and YoY +15.29%, and successfully mass-produced front combination lamps, rear combination lamps, and atmosphere lights for many popular models.
IC revenue in 2023 was 2.307 billion yuan, YoY +1.39%. San'an's integrated revenue was 2,211 billion yuan, YoY -27.15%. The GaAs foundry business 1H23 was pressured by weak demand and inventory removal, and 2H23 shipments increased rapidly. Quanzhou San'an filter business 1H23 is also under pressure. 2H23 is benefiting from the recovery of the industry and the increase in the share of 5G. At the same time, we are deeply cooperating with customers to develop advanced packaging technology. In the SiC manufacturing business, Hunan San'an's revenue was 951 million yuan, YoY +6.02%, lower than the market and our expectations. It was mainly due to delays in delivery by photovoltaic customers, and progress was made in the development and verification of automotive-grade products. Furthermore, the company is actively developing the field of optical technology.
At the end of 2023, the company's inventory was 5.310 billion yuan, down 497 million yuan from the beginning of the year. Among them, LED inventory decreased by 653 million yuan, increased 157 million yuan, and the inventory structure improved. 1Q24 The company's gross profit margin was 14.85% in a single quarter, QoQ+7.67ppt. The company's revenue growth and profit margin improvement in the first quarter were mainly driven by LED and RF front-ends. Capital expenditure in 2023 was 2,492 billion yuan, YoY -39%. We judge that the company has maintained discipline in expanding production capacity such as LED, GaAs foundry, and filters. On this basis, we believe that the gradual recovery of downstream consumer electronics will continue to bring revenue side growth and profit side repair to the company.
Profit forecasting and valuation
We raised the company's LED and other business expectations, lowered the SiC business forecast, and basically kept the company's revenue forecast unchanged. The company's 2024 revenue YoY is expected to be +18% to 16.557 billion yuan. Considering the restoration of the company's profit margins due to the recovery in LED and other businesses, the net profit for 2024 will be raised 30% to 1,364 billion yuan. A revenue forecast of 19.126 billion yuan and a net profit forecast of 1,849 billion yuan were introduced for 2025. The current stock price corresponds to 2024/2025 42.7x/31.5x P/E. The SOTP method was used to value the company. Due to the reduction in future expectations for the SiC business, the company's target price was lowered by 20% to 13.42 yuan, with 15% upward space to maintain the performance of the industry.
risks
The LED industry fluctuates cyclically, the Mini/Micro LED penetration rate falls short of expectations, the consumer electronics boom is sluggish, and the introduction of SiC products falls short of expectations.
