Key points of investment
Event: On April 25, 2024, the company released the 2023 Annual Report and the First Quarter 2024 Report.
In 2023, the company achieved operating income of 2,147 billion yuan, a year-on-year decrease of 6.88%, and realized net profit to mother of 64.509 million yuan, a year-on-year decrease of 49.54%. In the first quarter of 2024, the company achieved operating income of 574 million yuan, a year-on-year increase of 29.65%, and realized net profit to mother of 6.4669 million yuan, a year-on-year decrease of 64.33%.
The revenue trend is improving, and domestic revenue is back on track. The company's main business is wireless communication modules and IoT solutions. Wireless communication module products are divided into digital transmission modules, intelligent modules, high computing power modules, etc. from the perspective of functional differences.
In 2023, the company achieved operating income of 2,147 billion yuan, a year-on-year decrease of 6.88%, achieved net profit of 64.509 million yuan, a year-on-year decrease of 49.54%, and realized deducted non-net profit of 36.969 million yuan, a year-on-year decrease of 62.52%, and a gross profit margin of 19.16%. In the first quarter of 2024, the company achieved operating income of 574 million yuan, a year-on-year increase of 29.65%, and realized net profit to mother of 6.4669 million yuan, a year-on-year decrease of 64.33%. Non-net profit of 5,099 million yuan was deducted, a year-on-year decrease of 60.72%, and a gross profit margin of 15.69%. The company continued to increase its business layout and product development in overseas markets, and domestic revenue returned to a growth trajectory. In the first quarter of 2024, overseas revenue was 226 million yuan, up 53.74% year on year, and domestic revenue was 348 million yuan, up 17.57% year on year.
Deeply cultivate intelligent modules and maintain the leading edge in high computing power module technology. The company closely follows the development trend of intelligence and customization in the module market, deeply explores the direction of smart modules and computing power modules, maintains the technological leadership of smart modules and high computing power module products, and establishes comprehensive technical capabilities with unique advantages in 4G/5G wireless communication, Android systems, high-performance low-power computing, edge-side AI, and terminal-side AI. The company runs the Stable Diffusion large model on the high-computing power AI module, which supports a series of languages such as LLAMA-2, Tongyi Qianwen, Baicuan Big Model, RedPajama, ChatGLM2, Vicuna, etc., and related computing power products have been applied on a large scale in various core scenarios. In the field of cloud computing servers, customized solutions are perfectly applied to leading ARM architecture array server clusters. Performance consumption is increased by more than 2 times while completing the same computing tasks. In the field of intelligent robots, high-computing power AI modules match the high computing power requirements of intelligent robots and next-generation embodied intelligent robots to help robots achieve AI awakening. In the fields of industrial vision, AI retail, etc., the standardized AI kit launched by the company performs structured video analysis of multiple cameras, quickly realizes intelligent perception of people, things, and objects, data analysis, safety management, etc., and quickly integrates AI into many traditional industries. The company's high-computing power AI module products achieve full coverage of 1.2T to nearly 48T products, fully meeting the computing power needs of different industries.
Module+solution two-wheel drive, increasing vehicle scale. The company always adheres to the wireless communication module+IoT solution two-wheel drive product strategy. Based on module products, the company continues to strengthen its solution capabilities in different vertical industries, fully meet the differentiated needs of IoT customers with different backgrounds, and form a unique core competitiveness in terms of product strategy. The company's 5G smart module products are in an industry-leading position in the smart cockpit field, leveraging R&D accumulation in 5G\ Android\ AI, exploiting the application potential of core R&D and product capabilities such as 5G communication, Android system customization, high-performance low power computing, and AI applications, and cooperating with customers to complete various intelligent functions such as high-speed 5G networks, deep Android system customization, one-core multi-screen, DMS, 360-degree surround view, accurate sound zone positioning, continuous voice recognition, etc., to enhance the value of smart module products in the core vertical field of new energy vehicles. The company continued to increase R&D and market investment. In '23, the company invested 266 million yuan in R&D, up 4.73% year on year, and sales expenses were 63.797 million yuan, up 37.62% year on year. In terms of research and development, investment in 5G smart cockpits, 5G vehicle-grade modules, and 5G smart T-Box has increased, and the market is focusing on developing terminal vehicle manufacturers and overseas customers. The company continues to ship large quantities of 5G smart cockpit modules to core automotive customers, driving rapid revenue growth in the smart connected vehicle sector, and its share continues to rise.
Investment advice: The company is deeply involved in IoT modules in the automotive field, and also lays out high-computing power modules. Considering the gradual increase in the shipment volume of the company's 5G smart modules and the increase in competitive pressure after the increase in shipments, the company's profit forecast was adjusted to forecast that the company's 2024-2026 revenue was 28.45/34.37/3,944 billion yuan, up 32.5%/20.8%/14.8% year on year. The company's net profit to mother was 1.52/1.92/227 billion yuan, respectively, up 136.0%/26.2%/18.2% year on year, corresponding to EPS 0.58/0.73/0.87 yuan, PE 37.2/ 29.5/24.9, maintaining the “Overweight” rating.
Risk warning: New product introduction falls short of expectations; market competition continues to intensify; overseas market expansion is unfavorable.