Matters:
On April 26, 2024, the company released its 2024 quarterly report:
2024Q1 achieved operating income of 136 million yuan, +2.48% year over month, -12.98% month on month; gross profit margin of 26.59%, +4.15 pct year on year, +3.58 pct month on month; net profit to mother of 003 million yuan, turning loss into profit month-on-month; net profit after deduction of -08 billion yuan, a decrease in month-on-month losses.
Commentary:
Profitability continues to recover, and the recovery in the cycle combined with the release of new products is expected to drive a gradual improvement in the company's performance. The company continues to broaden its product matrix and strategically focus on high-margin products to drive steady growth in performance and continuous improvement in profitability. 2024Q1 achieved revenue of 136 million yuan, +2.48%/-12.98% YoY; gross profit margin of 26.59%, +4.15pct/month-on-month +3.58pct; net profit to mother turned loss into profit; net profit after deduction of net profit to mother reduced loss. In terms of inventory, the company's inventory at the end of March 2024 fell from 160 million yuan at the end of December 2023 to 148 million yuan, and has gradually returned to a healthy level. Looking forward to the future, as the industry cycle recovers and the company's new products continue to be released, it is expected to drive continued recovery in performance and profitability.
The recovery in terminal demand is imminent, and domestic substitution is accelerating, and local PMIC manufacturers are expected to continue to benefit.
Currently, the domestic LED driver, DDIC and other industries have reached the end of the inventory phase, and the release of new products such as mobile phones and PCs is expected to gradually pick up demand for related pan-consumer chips. Referring to the current state of the industry cycle, we believe that the semiconductor industry boom cycle has begun to recover. In terms of the competitive landscape, at present, the localization rate of power management chips in China is still low. In the context of the last round of core shortages combined with domestic substitution, domestic manufacturers such as Biyi Wei have gradually risen in some segmented tracks. At present, the company has become an advantageous supplier in the driver IC and AC/DC markets. At the same time, the company is actively expanding new products such as DC/DC, motor/gate drivers, battery management, etc., and is developing signal chain businesses such as amplifiers, converters, sensors, isolation chips, and interface chips. In the future, the company is expected to further increase its revenue volume and market share in the process of recovering demand and promoting domestic substitution.
The company maintains a high level of investment in R&D and broadens the product layout to open up room for growth. The company's endogenous extension expands product categories and application areas. In 2023, the company's R&D investment accounted for +5.62 pct of revenue to 27.54% year-on-year. On the AC/DC side, the company continues to launch various products such as interlaced PFC and LLC to actively promote the localization process of high-power fast charging (up to 240W) and high-power power supply (up to 3000W) applications; on the DC/DC side, the company is actively developing high-current products above 8A and high-voltage products above 60V. Among them, CMCOT architecture DC-DC products with 100V high voltage resistance have been introduced to customers and tested; on the BMS side, the company is also actively developing and supporting daisy chain cascading for 200-800V high voltage segment applications BMS AFE chip. Furthermore, the company completed a new layout of the motor drive business through the acquisition of Dongxin Micro Chengdu. In the future, the company is expected to quickly achieve breakthroughs in new businesses based on its accumulation in AC/DC and other fields.
Investment suggestions: Demand for terminals is gradually picking up, domestic substitution is advancing at an accelerated pace, and the company continues to broaden its product layout to open up room for long-term growth. We maintain the company's 2024-2026 net profit forecast of 0.24/0.55/ 0.95 billion yuan, and the corresponding EPS of 0.35/0.80/1.37 yuan, maintaining the “recommended” rating.
Risk warning: Industry competition intensifies; new product development progress falls short of expectations; downstream demand falls short of expectations.