The scale effect of RF module products continued to increase, and net profit to mother increased 69.83% year-on-year in 24Q1.
The company's revenue in 2023 was 4.378 billion yuan, up 19.05% year on year, net profit to mother was 1,122 billion yuan, up 4.95% year on year, and net profit after deducting non-return to mother was 1,095 billion yuan, up 2.78% year on year. 24Q1 revenue in a single quarter was 1,190 billion yuan, up 67.16% year on year, net profit to mother was 198 million yuan, up 69.83% year on year, net profit without return to mother was 194 million yuan, up 64.82% year on year. The net profit increase benefited from the release of RF module products; gross profit margin was 42.78%, down 0.21 pct month on month, net profit margin 16.56%, down 6.55 pct month on month. The decline in net profit margin was 5.82 pcts month-on-month.
24Q1 RF module's revenue share increased to 41%, and self-built filter production lines gradually unleashed potential.
In '23, revenue from RF module products was 1,591 billion yuan, up 42.22% year on year, accounting for 36.34% of total revenue. The revenue share increased by 5.92 pct year on year, gross profit margin was 45.77%, down 7.26 pct year on year. By the end of '23, the company's 6-inch filter production line had actually shipped more than 8,000 pieces/month. DiFem, LDiFem, and GPS module products with integrated self-produced filters continued to be sold on brand clients, and the revenue share of 24Q1 module products increased further to 41%. In 2023, the revenue of RF discrete device products was 2,714 billion yuan, up 8.94% year on year, accounting for 61.99% of total revenue. The gross profit margin was 47.25%, down 6.02 pct year on year.
L-PAMID achieved a breakthrough of 0-1 and is expected to become one of the leading producers of PAMID in the country.
The share of MAX-SAW shipments gradually increased in '23, and market demand exceeded the company's expectations. 24Q1 achieved a major breakthrough from 0 to 1 by integrating L-PAMID produced in-house MAX-SAW, and is already in the engineering sample stage.
According to statistics, the current value of PAMID in a single 5G phone can reach 11.45 US dollars, and the average value is about 6.71 US dollars. The company is expected to take the lead in the domestic production of PAMid and enjoy the high-value market.
The 12-inch IPD platform has officially entered mass production and will continue to explore new process technologies/product forms.
Due to the accelerated progress of the company's 12-inch factory, the 24Q1 R&D expenditure rate was 22.59%, an increase of 5.82 pct over the previous month, and fixed assets increased sharply by 2,799 billion yuan to 5.217 billion yuan by the end of the year of 24Q1 compared to the end of 23. With high R&D investment, 24Q1's 12-inch IPD platform has officially entered the mass production stage. L-pamif, LFEM and other related module products that integrate self-produced IPD filters have been verified and mass-produced on multiple clients. In addition, the company will continue to explore new 12-inch process technologies/product forms and industry applications.
The leading RF chip leader embraces the 100 billion high-end RF front-end market and maintains an “gain” rating.
According to IDC data, global smartphone shipments increased 7.8% year on year in 24Q1. Among them, Android phones increased 12.3% year on year, showing accelerated growth, and domestic RF manufacturers may benefit. As a leading semiconductor RF chip leader in China, the company is expected to seize a high share of RF front-end and open the 100-billion-level high-end RF front-end market. Net profit is expected to be 1,401/16.90/2.02 billion yuan respectively from 2024 to 2026, corresponding to PE 37.3/30.9/26.1 times in 24/25/26, maintaining an “increase” rating.
Risk warning: market risk; risk of declining gross margin; risk of technological innovation; risk of inventory impairment, etc.