Incident: The company published its annual report for '23 and its quarterly report for '24. Revenue for the full year of '23 was 6.061 billion yuan (-12.31%), net profit to mother of 619 million yuan (+1.80%), net profit after deducting non-return to mother of 565 million yuan (+3.45%), and gross profit margin of 22.63% (-0.98pcts). 24Q1 revenue was 1,291 billion yuan, +1.79% year over month, -25.55% month on month; net profit to mother was 77.43 million yuan, -24.21% year over year, -62.22% month on month.
24Q1 gross profit margin 22.53% (year-on-year +0.49pcts, month-on-month -2.18pcts).
Continuous investment in R&D and stable cost control. In 23 years, the company continued to invest in R&D of products such as high-speed optoelectronic chips, high-end optical transceiver modules, and C++/L++ optical amplifiers to enhance the company's market competitiveness; R&D expenses were 560 million yuan, -15.26% over the same period last year. In '23, the company's expense control was stable, with a sales expense ratio of 2.24% (-0.25pcts), and a management expense ratio of 1.92%, the same as the previous year; the financial expense ratio was -2.55% (-0.76pcts).
Continue to promote the industrial layout of high-end optical devices and modules. Transmission revenue in '23 was 3.344 billion yuan (-8.55%), gross profit margin 29.56% (-0.78pcts); access and data revenue was 2,664 billion yuan (-17.01%), gross profit margin 13.05% (-2.39pcts). Domestic revenue was 3.981 billion yuan (-9.02%), gross profit margin of 20.58% (-0.83 pcts); overseas revenue was 2,080 billion yuan (-17.98%), and gross profit margin of 26.56% (-1.07pcts). In the future, the company plans to further expand the overseas digital communication market, which is expected to drive further growth in performance.
Lay out new fields, new customers, and new products. The company continues to develop high-speed optical modules and is expected to benefit from 400G backbone network construction and artificial intelligence cluster demand for 400G/800G/1.6T high-speed connections in the long term. In the field of telecommunication transmission, optical module products such as C++/L++ optical amplifiers and 50G PON developed by the company began to be delivered in batches. In the digital communication field, the company will promote the commercialization and development of optoelectronic chips such as lasers, detectors, and thin-film lithium niobate with a PAM4 rate of 100G and above, and deliver 400G/800G coherent optical modules in batches. In addition, on the OFC2024, the company and Cisco launched the 1.6T silicon optical module, and ByteDance showcased the 800G OSFP SR8 high-speed optical module, showing the company's continued development and development.
Profit forecast. We believe that as AIGC boosts demand for high-speed optical modules at home and abroad, and inventory removal in the telecommunications and traditional digital communication industries comes to an end, the optical communications industry is expected to maintain rapid long-term development. Guangxun Technology is in a leading position in the competitive landscape of the industry, and the business is expected to maintain steady growth. We expect the company's 2024-2026 net profit to be 819, 10.21, and 1,233 million yuan, respectively, and EPS of 1.03 yuan, 1.29 yuan, and 1.55 yuan. Referring to the company's historical valuation and the average valuation level of comparable companies, the company was given a 2024 PE range of 40-50X, corresponding to a reasonable value range of 41.20-51.50 yuan, which is “superior to the market” rating.
Risk warning. Industry demand is picking up and uncertainty, downstream manufacturers are expanding upstream, and industry competition is intensifying.