Incidents. On April 22, the company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved operating income of 13.861 billion yuan, a year-on-year decrease of 2.59%; net profit to mother was 91 million yuan, a year-on-year decrease of 85.43%. In the first quarter of 2024, the company achieved operating income of 3,954 billion yuan, an increase of 26.06% over the previous year, and realized net profit of 55 million yuan, an increase of 140.60% over the previous year.
24Q1 achieved both revenue and net profit growth, and the net interest rate level gradually improved. Facing various adverse factors in the international economic environment in 2023, the company's performance was under pressure, achieving operating income of 13.861 billion yuan, a year-on-year decrease of 2.59%; net profit to mother was 91 million yuan, a year-on-year decrease of 85.43%. With the gradual recovery of demand in the downstream market, the company made full use of the advantages of resources accumulated over many years to continue to strengthen and improve the company's development and operation strategy, and revenue continued to improve in each quarter of 2023. 2024Q1 achieved operating income of 3,954 billion yuan, an increase of 26.06% year on year; realized net profit of 55 million yuan, an increase of 140.60% year on year, and net profit reversed losses year on year. In terms of profitability, the company increased R&D project control, carried out multiple rounds of screening of existing projects, and increased the input-output ratio of the project, while controlling the number of personnel and management remuneration to increase unit personnel output. The net sales interest rate for 2024Q1 was 1.33%, an increase of 5.69 pct over the previous year, and profitability improved.
Deeply cultivate the core IoT business and insist on investing in R&D to help innovate product technology. The company is the world's leading supplier of IoT overall solutions. It has a complete range of IoT products and services, covering hardware products such as cellular modules, automotive front-mounted modules, intelligent modules, short-range communication modules, GNSS positioning modules, satellite communication modules, antennas, etc., as well as services and solutions such as software platform services, certification and testing, industrial intelligence, agricultural intelligence, etc. In 2023, R&D investment was 1,604 billion yuan, an increase of 20.19% over the previous year. It has eight R&D centers in Shanghai, Hefei, Foshan, Guilin, Wuhan, Vancouver, Belgrade, and Penang, covering China, North America, Europe, the Asia-Pacific region, etc., providing strong support for the company's rapid global development. In 2023, 5G, automotive, and short-range module businesses continued to grow, while accelerating ODM, antenna and other businesses. The company's products can be widely used in smart transportation, smart energy, financial payment, smart cities, wireless gateways, smart agriculture and environmental monitoring, smart industry, smart living and healthcare, and smart safety. We believe that as the company's R&D investment continues to increase, it is expected to drive continuous iterative upgrading of products and technologies, and the company's performance is expected to continue to improve.
Profit forecast and investment rating: We expect the company's 2024-2026 net profit to be 4.57/6.19/801 million yuan, and the 2024-2026 EPS will be 1.73/2.34/3.03 yuan, respectively. The current stock price corresponding to PE is 22/17/13 times, respectively. We believe that 1) The company focuses on module market segmentation and provides one-stop IoT solutions around modules. The world's eight major R&D centers have leading R&D capabilities. 2) The company adheres to an international strategy. The sales channels cover China, Europe, North America, Asia, Africa and Latin America, etc., and has good brand and channel sales advantages, which is expected to help the rapid development of new businesses. 3) The company has a stable supply chain, has its own intelligent manufacturing center and cooperative manufacturers, and has advanced testing equipment to ensure stable customer applications. In view of the company's insistence on R&D investment and accelerated innovation in product technology, we are optimistic about the company's future performance development, covered for the first time, and gave it a “buy” rating.
Risk warning: risk of macroeconomic fluctuations; risk of rising raw material prices; risk of new product technology development; risk of rising labor costs.