1Q24 results fell short of our expectations
Sirup announced 1Q24 results. Operating revenue was 200 million yuan, down 34.9% year on year; net profit to mother was -049 million yuan, a year-on-year decrease of 51 million yuan; net profit loss after deducting non-recurring profit and loss was -74 million yuan, a year-on-year decrease of 55 million yuan; and the company's gross margin was 47.6%, down 10.2 ppts year on year. The company's 1Q24 performance fell short of our expectations, which we believe was mainly due to weak downstream demand and price declines due to current fierce market competition.
Development trends
Gross margins are under pressure due to demand in the short term, and operations are steady with plenty of cash on hand. We believe that the short-term pressure on the company's gross margin is mainly due to weak downstream demand and market competition. Considering that it will take time for downstream demand such as industry and communications to recover, we believe that the short-term trend may continue. In the long run, we are optimistic that the introduction of customers in the company's industrial and other fields and the continuous launch of new power management chip products will bring continued revenue growth to the company. As of March 31, 2024, the company's monetary capital and transactional financial assets totaled 4.317 billion yuan. The company has plenty of cash on hand. We believe that sufficient cash will help the company operate steadily, maintain R&D investment, and enhance long-term competitiveness.
Product categories and models continue to be rich, and the MCU is progressing smoothly. In 2023, the company continued to improve its product line. According to the company's announcement, the company launched a number of signal chain product categories, including 4-channel EML controllers that can be used for high-speed optical modules, automotive-grade CAN series products, etc.; in the field of power management, the company mass-produced various DCDC switching power supply products and industrial PMIC products, and launched a variety of automotive-grade LDO products; in the MCU field, the company achieved mass production and shipment in 2023. The two major series of products in the TPS32 mixed signal microcontroller product line were mass-produced and released, with a total of 26 products. We believe that as the company's product categories and models continue to be enriched, the company's sales volume and market share are expected to continue to increase.
By actively expanding automotive products, revenue in the automotive sector is expected to grow in the long term. According to the company's announcement, in 2023, the company launched a series of groundbreaking products in the automotive field. By the end of 2023, more than 110 products in more than 20 categories had been launched. According to the company announcement, in 2024, the company will increase R&D investment in automotive DCDC, CAN, high-voltage LDO, transmission, audio bus, and battery management system products. We believe that the company's layout in high-boom fields such as automobiles is expected to become the company's new growth curve, driving the company's revenue and profitability growth.
Profit forecasting and valuation
Considering the impact of downstream demand recovery progress and price decline, we lowered the company's 2024/2025 revenue forecast by 16%/17% to 1.32 billion yuan/1.66 billion yuan; lowered the 2024/2025 profit forecast by 68%/28% to 60 million/230 million yuan. Maintaining an outperforming industry rating, we lowered our target price by 21.2% to 108.69 yuan, corresponding to the 35x forward price-earnings ratio and 12.5% discount rate in 2027. There is 17% room for increase compared to the current stock price.
risks
New product development progress falls short of expectations; customer introduction falls short of expectations; downstream prosperity falls short of expectations, etc.