Revenue in 2023 decreased by 21.52% year over year, and 1Q24 revenue increased month-on-month. The company's sales volume increased by 34% in 2023, but due to pressure on product sales prices, revenue in 2023 decreased by 21.52% year on year to 1,311 billion yuan, achieving net profit attributable to mother - 305 million yuan (YoY -222%), net profit after deducting share payments of -393 million yuan (YoY -332%), and net profit to mother after excluding share payments was -84 million yuan; at the same time, the company's gross margin fell 11.4 pct to 38.59%. 1Q24's revenue was 362 million yuan (YoY -23%, QoQ +17%), and continued to increase month-on-month since 2Q23; net profit to mother was 150 million yuan, and gross margin was 32% (YoY -13.3pct, QoQ +1.4pct). R&D expenses increased 29% to $522 million in 2023, and R&D expenses increased 15.6pct to 39.79%. High R&D investment put pressure on short-term profits.
The gross margins of various product lines are under pressure, and the share of automotive electronics revenue has increased. By product line, the company's signal chain product revenue in 2023 was 705 million yuan (YoY -32.55%), accounting for 54%, and gross margin decreased by 12.41 pct to 40.47%; power management product revenue of 428 million yuan (YoY -16.08%), accounting for 33%, gross margin decreased by 13.38 pcts to 29.55%; sensor product revenue of 166 million yuan (YoY +49.18%), accounting for 13%, gross margin decreased by 3.41 pcts to 52.03%. From a downstream perspective, the automotive electronics sector accounted for 30.95% of revenue in 2023, up 7.82pct; the pan-energy sector's revenue share fell 10.17pct to 59.52% due to industry inventory removal; and the consumer electronics sector's revenue share increased 2.33pct to 9.51%.
Automotive electronics applications have been comprehensively laid out, and various automotive chips are progressing smoothly. The company has a comprehensive layout of automotive electronics applications, and its products are widely used in automotive three-electric systems, body control, intelligent cockpits, etc. In terms of sensors, the magnetic linear current sensors launched by the company have been widely used in automotive main drive motor current detection scenarios. Vehicle grade magnetic switches, magnetic wheel speed sensors, etc. have completed sample delivery tests; in terms of signal chain products, automotive-grade CAN FD interface chips and LIN interface chips have been fixed in some automotive customers; in terms of power management products, DC brush motor drives, multi-channel half-bridge drives, relay/solenoid product lines have been shipped on a large scale. The new products launched with multi-channel pre-drive motor drives and stepper motor drivers have obtained multiple domain control and body control Tier-1 Fixed-point LED driver products used for penetrating taillights have been mass-produced, and the first high-side switch product has been introduced to leading automotive customers, and mass production is expected in 2024.
Investment advice: Various new products have been successfully mass-produced to maintain the “purchase” rating. We expect the company's net profit to be -1.72/+0.81/+191 million yuan in 2024-2026 (the value before 2024-2025 was -1.53/+89 billion yuan), and the PS corresponding to the stock price on April 26, 2024 is 7.2/5.6/4.6x, respectively. The company focused on the pan-energy and automotive sectors, successfully mass-produced a variety of new products and maintained a “buy” rating.
Risk warning: demand falls short of expectations, product development falls short of expectations, and customer introduction falls short of expectations.