Starway's 2023Q4 and 2024Q1 revenue increased significantly year-on-year, and net profit after deducting non-return to mother turned a year-on-year loss into a profit. In 2023, the company's high-end smartphone XS series CIS introduced flagship phones, while the smartphone business achieved rapid growth. Maintain a buy rating.
Key points to support ratings
The company's 2023Q4 and 2024Q1 revenue increased significantly year-on-year, and net profit after deducting non-return to mother turned a year-on-year loss into a profit. Starway's 2023Q4 revenue was 1,084 million yuan, YoY +31%; gross profit margin was 22.7%, YoY+8.4 pcts; net profit after deducting non-return to mother was 61 million yuan, turning a year-on-year loss into a profit. Starway's 2024Q1 revenue was 837 million yuan, YoY +84%; gross profit margin was 21.3%, YoY+1.5pcts; net profit without return to mother was 20 million yuan, turning a year-on-year loss into a profit.
Smartphones and automotive electronics contributed important growth points, and smart security remained stable. In 2023, Starway's smartphone CIS revenue was 892 million yuan, YoY +50%; automotive electronics CIS revenue was 294 million yuan, YoY +30%; smart security CIS revenue was 1,671 billion yuan, which was basically the same as the previous year. In 2023, many of the company's XS series 50 megapixel products were successfully applied to the main camera, wide-angle, telephoto and other cameras of high-end flagship phones, and the unit price was high, opening up a second growth curve for the smartphone business.
Costs continue to be optimized, and inventory removal is smooth. In 2023, Starway and supply chain strategic partners further deepened their cooperation. The scale of cooperation increased significantly, the production process became more mature and product yield was further improved, and the company's gross margin improved quarterly. The company's inventory at the end of 2023 was about 2.28 billion yuan, a significant decrease compared to 2.93 billion yuan at the end of 2022.
valuations
The estimated revenue for 2024/2025/2026 is 43.01/57.36/7.131 billion yuan, respectively.
EPS for 2024/2025/2026 was 0.67/1.28/1.89 yuan, respectively.
As of the close of April 26, 2024, the market value of Starway was 18.9 billion yuan, corresponding to 2024/2025/2026 PE 70.5/36.8/25.1 times, respectively. Taking into account the company's rapid growth in the smartphone business, we slightly raised our 2024 profit forecast. Maintain a buy rating.
The main risks faced by ratings
End market demand fell short of expectations. The CIS verification progress for 50M high-end phones fell short of expectations. The penetration rate of autonomous vehicles falls short of expectations. Security recovery has fallen short of expectations.