1Q24: Short-term revenue under pressure, waiting for new customers/new projects to be introduced
In '23, the company achieved revenue of 552 million yuan (yoy: +54.77%), net profit to mother of 409 million yuan (year-on-year increase of 104 million yuan), and net profit of non-return to mother of 450 million yuan (year-on-year increase of 142 million yuan). 1Q24 achieved revenue of 105 million yuan, net profit attributable to mother of -81 million yuan (year-on-year increase of 0.16 million yuan, month-on-month decrease of 0.17 million yuan), and net profit of non-return to mother of -93 million yuan (year-on-year increase of 0.27 million yuan, year-on-month loss reduction of 32 million yuan). 1Q24 The company's revenue declined month-on-month, mainly due to seasonal factors and factors such as customer project planning/delivery pace, but in terms of gross margin, it has improved month-on-month. It is expected that with the introduction of new customers/new projects and large-scale shipments of the company's L-PAMID products, annual revenue is expected to increase year-on-year. We expect revenue of $7.0/10.4/1.48 billion yuan in 24/25/26. Considering the company's breakthroughs in Android brand mobile phone clients and mass production of various new products such as L-pamid in 24 years, we will give 10x 24PS (industry average value 6.4 x 24PE), a target price of 15.4 yuan, and a “buy” rating.
1Q24 review: Revenue declined month-on-month, gross margin improved month-on-month. In 2023, the company's penetration rate among brand customers gradually increased, and 5G module product revenue increased dramatically.
Specifically, the 4G module and 5G module achieved revenue of 200/352 million yuan respectively in 2023 (yoy:
+5.26%/+111.16%). Due to increased market competition, the gross margin of 4G module/5G module was 5.09%/15.86% (yoy: -4.51pct/-11.67pct), respectively. The first quarter is a traditional low season, and the company's current revenue volume is small. Single quarter revenue is easily affected by factors such as customer project progress and delivery pace, and 1Q24's revenue declined year-on-month. The 1Q24 company's gross margin was 7.97% (yoy:
-15.65pct, qoq: +1.81pct). It is expected that with the continuous penetration of 5G module products among brand customers and the gradual launch of new iterations of 4G PA module products, the company's gross margin is expected to improve further in the second half of the year.
2024 outlook: L-pAMID achieves large-scale mass production, focusing on the introduction and penetration of mobile phone brand customers. We expect global Android phone market shipments to achieve medium to low single-digit year-on-year growth in 2024, and the company's annual revenue is expected to achieve double-digit growth. The main driving forces include: 1) L-pAMID products continue to advance in mobile phone brand customer verification and import, and are expected to achieve large-scale mass production in 24 years; 2) The competitiveness of new products such as 5G L-pamiF and 5G MMMB PA modules that support low-voltage PC2 and high-power 5G MMMB PA modules Enhancement is expected to accelerate the company's penetration of domestic and foreign mobile phone brand customers; 3) Higher performance and more cost-effective 4G MMMB PA module products will be launched in 24 to help the company maintain its competitive advantage in the 4G long-tail market. At the same time, as revenue contributions from iterative products increase, it is expected to drive an improvement in overall gross margin.
Investment suggestion: The target price is 15.4 yuan, giving a “buy” rating. We expect the company's revenue to be 7.0/10.4/1.48 billion yuan in 24/25/26, respectively. Considering that the company has successively broken through Android mobile phone clients and achieved mass production of various new products such as L-pamid in 24 years, we will give 10x 24PS (industry average value 6.4 x 24PE), target price 15.4 yuan, “buy” rating.
Risk warning: Downstream demand is recovering slowly, market competition is intensifying, and technology upgrades and iterations fall short of expectations