The weakening cycle affected the 2023 performance. Research and development progress was accelerated. Demand recovery is promising that Shengbang shares will achieve full year revenue of 2,616 billion yuan (-17.94% yoy) and net profit to mother of 281 million yuan (-67.86% yoy) in 2023. Mainly due to weak market demand, the sales volume of the company's products and the prices of some products declined. The company's gross margin in 2023 was 49.60%, -9.38pcts year-on-year. In 2023, the company launched more than 900 new products, which can be applied to industrial control, automobiles, communications, consumer electronics and medical devices, etc., and the pace of new product iteration is accelerating. 1Q24 achieved revenue of 729 million yuan (+42.03% yoy), net profit to mother of 54 million yuan (+80.04% yoy), and gross margin of 52.49%, +5.27pcts month-on-month. The off-season was not weak. At the 1Q24 performance conference, Texas Instruments proposed that the current industrial and automotive fields may have bottomed out. They are optimistic that the simulation industry's prosperity will gradually improve, and the company will benefit as a leading domestic analog device. We expect a profit of 4.6/6.4/91 billion yuan in 2024-2026, maintain the “purchase”, give 72 times the 25-year PE (the company's median valuation since listing is 82 times PE), and the target price is 98.64 yuan.
2023 review: Weak downstream demand affects product sales and sales prices. New product expansion accelerated in 2023 signal chain product revenue of 870 million yuan, accounting for 33.25%, a year-on-year decrease of 27.07%, with a gross profit margin of 56.64%; power management product revenue of 1,746 billion yuan, accounting for 66.75%, a year-on-year decrease of 12.31%, and a gross profit margin of 46.10%. In 2023, the company's gross margin was 49.60%, -9.38pcts year-on-year. Affected by weak downstream demand, the company's product sales volume declined and sales prices were under pressure. In 2023, the company invested 737 million yuan in R&D, an increase of 17.78% over the previous year. The number of R&D personnel reached 1,029 in 2023, accounting for 72.72% of the total number of employees, an increase of 14.84% over the previous year. In 2023, the company launched more than 900 new products. Currently, it can sell more than 5,200 products, covering 32 categories. Automotive products have expanded from rear to front, new models have begun to contribute revenue, and the customer penetration rate continues to increase.
1Q24&24 outlook: Demand bottomed out to drive high performance growth. Waiting for new product releases to drive growth, Shengbang Co., Ltd. achieved revenue of 729 million yuan (+42.03% yoy), net profit to mother of 54 million yuan (+80.04% yoy), gross margin of 52.49%, -0.17pcts year over year, and +5.27pcts month-on-month. According to SIA statistics, global semiconductor sales declined year over year in 2023, showed signs of easing in 4Q23, and are expected to grow in 2024. Looking ahead to 2024, as demand gradually recovers and new products and new customers continue to be introduced, the company's performance is expected to continue to grow, and subsequent gross margin is expected to improve year-on-year. At the 1Q24 performance conference, Texas Instruments proposed that current demand has improved, and that some fields of industry and automobiles may have bottomed out. They are optimistic that the simulation boom will improve, and that the company will benefit as a leading domestic analog device.
Maintain a “buy” rating and target price of $98.64
Considering the improvement in economic climate, we adjusted the company's 24-25 revenue forecast to RMB 32.5/4.02 billion (previous value: RMB 31.1/RMB 3.73 billion), and the corresponding net profit to mother was RMB 46/64 billion (previous value: RMB 41/550 million).
Maintain “buying”, and considering the slow return of the company's profit margin, give 72 times PE for 25 years (the company's median valuation since listing is 82 times PE), and adjust the target price to 98.64 yuan (previous value: 91.7 yuan).
Risk warning: Global semiconductors have entered a downward cycle, demand for mobile phones, etc. falls short of expectations, and industry competition has intensified.