Matters:
On April 25, 2024, the company released the 2023 Annual Report and the 2024 Quarterly Report:
1) 2023: Operating income of 1,311 billion yuan, -21.52% year on year; gross profit margin 38.59%, -11.42pct year on year; net profit due to mother/after deduction of -3.05/-393 million yuan, -221.85%/-332.08% year on year;
2) 2024Q1: Operating revenue of 362 million yuan, -23.04%/+16.89% YoY; gross profit margin 32.00%, YoY/M -13.31 pct/+1.41pct; net profit attributable to mother/after deduction of -1.50/-159 million yuan.
Commentary:
Revenue continued to rise month-on-month, and the recovery in the cycle combined with the release of new products is expected to drive a gradual recovery in performance. The company continued to expand its product range, but its 2023 performance declined year-on-year due to weak demand and customer inventory removal. According to downstream applications, the company's share of automotive electronics revenue in 2023 was +7.82 pct to 30.95% year on year, consumer electronics revenue was +2.33 pct to 9.51% year on year, and the share of pan-energy revenue fell to 59.52%. On a quarterly basis, the company's revenue has continued to improve month-on-month since 2023Q3. 2024Q1 achieved revenue of 362 million yuan, -23.04%/+16.89% YoY. The profit portion was affected by period expenses and equity incentives. Looking ahead, as the industry cycle gradually picks up, the company's revenue is expected to improve quarterly, and profitability is also expected to gradually recover.
Domestic automotive isolation chip leaders, improving layout and optimizing performance to drive a rapid increase in share. The domestic isolation and isolation+ chip market is vast and continues to expand. The company has now completed a multi-category layout, and has achieved batch supply in the fields of new energy vehicles, industrial control, communication power supplies, etc. As a leading domestic isolation chip, the company's revenue from isolation products continues to grow, and it is expected that it will continue to benefit from domestic replacement in the future. The company continues to invest and break through in isolation technology, and has successively launched new products such as isolated comparators, isolated ADCs with integrated LVDS interfaces, and capacitive isolated solid state relays. Among them, as the first fully integrated isolated comparator in China, it has been officially mass-produced, and has been recognized by many automotive and industrial customers, and product competitiveness continues to improve.
The company maintains a high level of investment in R&D and broadens the product matrix to open up room for long-term growth. The company's 24Q1 R&D investment accounted for 41.95% of revenue, and new products progressed smoothly under high R&D investment. In terms of magnetic sensors, the company's magnetic current sensors have been widely used in automobile main drive motors, and automotive-grade magnetic switches, magnetic wheel speed, etc. have completed sample delivery tests on clients; in terms of signal chains, the company has mass-produced automotive-grade CAN FD interfaces, LIN interfaces, PWM buffers, I? General-purpose interfaces such as C I/O extensions have been introduced, and new voltage reference products have been introduced in the general signal chain; in terms of power management, the company has made breakthrough progress in the field of automotive main drive functional safety gate drives. The first high-side switch product launched in the direction of power path protection has been introduced to leading automotive customers, and the continuous release of new products is expected to drive the company's performance to continue to grow.
Investment suggestion: There is broad scope for domestic replacement of analog chips. As a leading manufacturer of analog chips in the domestic automotive sector, the company is expanding its product range. Considering that the company is still in a high R&D investment stage, we adjusted the company's net profit forecast for 2024-2025 from RMB 0.44/227 million yuan to -177/072 million yuan, adding a net profit forecast of RMB 239 million for 2026, corresponding EPS of -1.24/0.51/1.67 yuan.
Referring to comparable company valuations and the company's historical valuation level, we gave the company 10 times PS in 2024, corresponding to a target price of 126.3 yuan/share, maintaining a “strong” rating.
Risk warning: New product launches fall short of expectations; demand for new energy vehicles falls short of expectations; industry competition intensifies.