Event: On April 25, 2024, Nanochip Microelectronics released its 2024 quarterly report. In the first quarter of 2024, the company achieved operating income of 362 million yuan, YOY -23.04%, QoQ +16.77%, and net profit to mother of 150 million yuan, which turned into a year-on-year loss.
Q1 Revenue grew month-on-month, and profits were under pressure due to high investment. Benefiting from the strong cyclical resistance of new automotive electronics products and the improvement in the consumer electronics boom, Nanochip's Q1 revenue was 362 million yuan, an increase of 16.77% over the previous month, continuing the recovery trend since Q2 in '23. However, due to increased competition in the market, gross margin fell to 31.99%. In addition, the company maintained a high investment in R&D, and R&D+management+sales expenses reached 264 million yuan, resulting in a loss of 150 million yuan in Q1.
Build an automotive+pan-energy simulation IC platform, and a variety of new products are about to be released. The company's many new products are progressing smoothly: 1) Sensors: Various current sensors have been shipped on a large scale, and magnetic sensing, temperature and humidity sensing, and pressure sensing are progressing smoothly. 2) Signal chain: Iterative upgrading of isolation products continues to have advantages, various new vehicle interface products have been launched, and CANFD and LIN have achieved mass production. 3) Power management: Pioneering the delivery of automotive gate drive engineering samples, motor drive series, motor drive, LED drive, and power supply have made important customer progress. In addition, the company is actively deploying third-generation power semiconductor SiC MOSFET related devices, and the 650V/1200V SiC MOSFET series is being fully sampled.
Downstream demand has improved marginally, and the value of stand-alone machines in the automobile market has steadily increased. The consumer electronics sector is improving, and inventory levels in the industrial market and photovoltaic and energy storage markets are gradually bottoming out, and are expected to improve in 2024. Overall demand in the automotive electronics sector is growing steadily. As client inventory consumption accelerates and demand picks up, the company's new products are progressing smoothly on the client side. At present, the products have been widely used in automotive three-electric systems, body control, smart cockpits, etc., and continue to break through application scenarios such as body electronics, smart automotive lighting, and thermal management for new energy vehicles, and reshape the company's growth curve.
Investment advice: We expect the company's net profit to be -134/0.78/329 million yuan in 2024/25/26, respectively, and 174/41 times the current PE price in 2025-26, respectively. The company's performance in 2023 is under pressure, but now it has gradually reached an inflection point, and in the long run, with the company's card position layout in the fields of new energy vehicles and pan-energy, growth is safe. Maintain a “Recommended” rating.
Risk warning: risk of insufficient product development iteration; risk of downstream demand falling short of expectations; risk of market competition.