Revenue in the first quarter increased 67% year over year, and R&D rates increased year over month. The company's revenue in 2023 was 4.378 billion yuan (YoY +19.05%), net profit attributable to mother was 1,122 million yuan (YoY +4.95%), after deducting non-attributable net profit of 1,095 billion yuan (YoY +2.78%), and gross margin decreased 6.5 pct to 46.45%. 1Q24 had revenue of 1,190 million yuan (YoY +67%, QoQ -8.8%), net profit to mother of 198 million yuan (YoY +70%, QoQ -35%), gross profit margin of 42.78% (YoY -6.1pct, QoQ -0.2pct), R&D expenses of 269 million yuan (YoY +119%, QoQ +23%), and R&D expenses increased to 22.6% (YoY +5.3 pct, QoQ +5.8pct).
In 2023, RF module revenue increased 42% year over year, and the share increased to 36%. By product line, in 2023, the company's RF discrete device revenue was 2,714 billion yuan (YoY +8.94%), accounting for 62%; gross margin decreased by 6.0 pct to 47.25%; RF module revenue was 1,591 billion yuan (YoY +42.22%), accounting for 36%, and gross margin decreased 7.3 pct to 45.77%.
The actual shipment of the 6-inch filter has exceeded 8,000 pieces/month, and L-PAMID integrated in-house MAX-SAW is already in the engineering sample stage. The company has achieved comprehensive breakthroughs in the product category of its self-built filter production line. It has large-scale mass production capacity for products such as duplexer/quadrature, single-chip multi-band filters, etc., and has launched products such as DiFeM, L-DiFem, GPS modules, and the high-end module L-FemID with integrated self-produced filters. Among them, MAX-SAW has achieved high-yield mass production, and the proportion of shipments has gradually increased. The production capacity of the first phase of the company's 6-inch filter production line is planned to be 10,000 pieces/month, and the production capacity of the second phase will increase to 16,000 pieces/month. By the end of 2023, actual shipments had exceeded 8,000 tablets/month. 1Q24 Integrated's self-produced MAX-SAW L-PAMID products have achieved a breakthrough from “0” to “1” and are already in the engineering sample stage.
The 12-inch IPD platform has officially entered mass production. In the first quarter of 2024, the company's 12-inch IPD platform officially entered the mass production stage. The IPD filters produced fully demonstrated the high accuracy and advanced architecture of the 12-inch process. L-pamif, LFEM and other related module products that integrate self-produced IPD filters have been verified and mass-produced and shipped to many clients. The company continues to focus on reserving production and research capabilities for advanced RF front-end chips and modules based on 12-inch wafers, continuously exploring new process technologies, product forms and industry application fields, developing new productivity to accelerate the construction of the main competitiveness of “intelligent quality manufacturing”, and gathering platform-based resources to create value for customers.
Investment advice: RF front-end product platform companies, maintain a “buy” rating due to increased R&D investment, we expect the company's net profit to be 12.33/15.15/1,823 billion yuan in 2024-2026 (the value before 2024-2025 was 1,457/1.772 billion yuan), with a year-on-year growth rate of +10/+23/ +20%. The PE corresponding to the stock price on April 29, 2024 is 40/33/27x, respectively. The company has formed an RF front-end product platform and maintains a “buy” rating.
Risk warning: The risk that new product development falls short of expectations, demand falls short of expectations, and increased competition.