Revenue for the first quarter increased 13.8% year over year, with a revenue target of 25.280 billion yuan for 2024. The company achieved revenue of 22.269 billion yuan (YoY +3.92%) in 2023, of which about 95% came from integrated circuit packaging testing; realized net profit of 169 million yuan (YoY -66.24%), net profit not to mother of 59 million yuan (YoY -83.31%); gross margin decreased by 2.2 pct to 11.67% due to reduced capacity utilization. 1Q24 had revenue of 5.282 billion yuan (YoY +13.8%, QoQ -17%), net profit to mother of 98 million yuan (YoY +2064%, QoQ -58%), and gross margin of 12.14% (YoY +2.7pct, QoQ -0.5pct). The company's revenue target for 2024 was 25.280 billion yuan, an increase of 13.52% over the previous year.
As AMD's largest sealed testing supplier, it will benefit from increased demand for AI. Demand for AI servers and AI terminals is increasing. MIC expects AI server shipments to reach 24.7% CAGR in 2027; Gartner expects shipments of GenAI smartphones and 54.5 million units by the end of 2024 to reach 240 million units and 54.5 million units respectively, with a penetration rate of 22%. In March 2024, AMD introduced the advantages of products such as the Ryzen 8040 series in terms of AI performance, indicating that millions of Ryzen AI PCs have been shipped. The company is AMD's largest sealed testing supplier, accounting for more than 80% of its total orders, and will benefit as its business grows.
Memory-related monthly revenue reached a record high, and automotive product projects increased 200% in 2023. In terms of memory products, the company continued to increase its stickiness with customers, and monthly revenue reached a record high; in terms of display driver products, the two leading customers achieved 20% growth; in terms of power semiconductors, the company seized the photovoltaic market window, and sales of high-power modules increased by more than 200 million yuan. In 2023, industry leaders such as French semiconductors completed the development of automated silicon carbide module production lines and achieved large-scale mass production; in terms of automotive products, the company has been deeply involved in the automotive electronics field for more than 20 years, and the automotive product project increased 200% year-on-year in 2023.
It continues to invest in 2D+ and other advanced packaging research and development, and plans to acquire 26% of Jinglong Technology's shares. The company continues to develop new technology and new products represented by 2D+. Oversized 2D+ packaging technology, 3-dimensional stacking packaging technology, and large-size multi-chip chip last packaging technology have been verified; SiP products have achieved the development and mass production of the first WB split cavity shielding technology in China; LQFP MCU completed R&D, introduction and mass production of high-reliability automotive products; and developed high thermal conductivity materials to meet the high heat dissipation requirements of FCBGA high-power products. In addition, the company plans to acquire 26% of Jinglong Technology's shares with 1,378 billion yuan in cash. Jinglong Technology has a differentiated competitive advantage in the field of high-end integrated circuit professional testing, with revenue of 2.150 billion yuan and net profit of 423 million yuan in 2023.
Investment advice: Benefiting from the upward semiconductor cycle and the implementation of AI applications, we expect the company's net profit to be 8.65/12.93/1,514 million yuan in 2024-2026 (the value before 2024-2025 was 852/1,269 million yuan), and the PE corresponding to the stock price on April 26, 2024 is 37/25/21x. The company benefits from the upward cycle and the implementation of AI to maintain a “buy” rating.
Risk warning: New product development falls short of expectations; demand falls short of expectations; risk of concentration of major customers.