Incidents:
On April 25, 2024, Nanoscin released its 2024 quarterly report: operating income for the first quarter of 2024 was 362 million yuan, down 23.04% year on year, up 16.89% month on month; net profit to mother - 150 million yuan, net profit not to mother - 159 million yuan, increasing losses from month to month.
Investment highlights:
Revenue from inventory removal increased month-on-month, and market competition intensified the year-on-year decline in gross margin. Since the second quarter of 2023, the company's revenue has increased quarterly, from 253 million yuan in the second quarter of 2023 to 362 million yuan in the first quarter of 2024. Overall demand in the downstream automotive electronics sector grew steadily in the first quarter of 2024, the consumer electronics sector improved, and the industrial market and photovoltaic and energy storage markets gradually removed inventory and recovered, and the company's revenue side is expected to continue to improve in 2024. Affected by the overall macroeconomy and increased market competition, the company's product sales prices were under pressure. The gross margin decreased by 13.31 pct year on year and increased by 1.41 pct month on month.
The downward cycle bucked the trend with increased investment, focusing on the layout of sensors, signal chains, and power management products.
The company focuses on talent and technology accumulation in the downward cycle of the industry. It continues to invest in various areas such as R&D investment, market development, supply chain system, quality management, and talent building. The number of technicians increased from 326 at the end of 2022 to 424 at the end of 2023. The cost rate also increased year-on-year. Stock payments reached 73.2 million yuan in the first quarter, fully realizing talent incentives. In the first quarter of 2024, the company released new products such as 8-channel 1Ω on-board low-side drivers, NSI22C1x series isolated comparators, NSOPA series general purpose amplifiers, and vehicle-grade 4/8-channel half-bridge drives, continuously enriching the product matrix.
The automotive semiconductor market is expected to continue to grow in the next few years, focusing on the company's long-term value. According to Mordorintelligence estimates, the global automotive semiconductor market is expected to grow from US$71.62 billion in 2023 to US$140.52 billion in 2028, with a CAGR of 14.43%, with the Asia-Pacific region having the highest share and growing the fastest in the next few years. The company shipped 164 million units in the automotive electronics sector in 2023, accounting for 30.95% of revenue. The products have been widely used in automotive tri-electric systems, body control, smart cockpits, etc. At the same time, it has achieved market breakthroughs in body electronics, smart automotive lighting, and thermal management for new energy vehicles. LED drives and motor drives have gained project targets from leading automotive customers, and it is expected that the future will continue to benefit from the expansion of the automotive electronics market.
Profit forecasting and investment ratings are leading domestic products such as nanoscale microisolators and sensors, and have strong competitiveness in pan-industrial, automotive and other fields. In the future, as market demand expands, the company's product development performance is expected to continue to grow. According to the quarterly report, we adjusted the 2024 profit forecast. The company's revenue for 2024-2026 is estimated to be 18.8/25.2/3.37 billion yuan, respectively, and net profit to mother is -1.53/0.44/274 million yuan respectively, corresponding to 2024-2026 PS, which is 7/5/4 times. Considering that future pan-industrial, automotive and other sectors are expected to gradually recover, maintain a “buy” rating.
Risks indicate that production capacity expansion falls short of expectations; risk of downstream application expansion falling short of expectations; continued loss of performance; risk of increased market competition; risk of new product development falling short of expectations, etc.