Incident: On April 26, 2024, the company released its report for the first quarter of 2024. The company achieved operating income of 1,141 million yuan, a decrease of 26.16% over the same period of the previous year, and realized net profit attributable to shareholders of listed companies of 307 million yuan, a decrease of 47.44% over the same period of the previous year. Net cash flow from operating activities was -272 million yuan, a decrease of 252.63% over the same period last year. As of the end of the reporting period, the company's total assets were 16.865 billion yuan, a decrease of 3.82% from the beginning of the period; owners' equity attributable to shareholders of listed companies was 11.954 billion yuan, an increase of 2.55% over the beginning of the period.
Comment:
Downstream demand in the special integrated circuit business was briefly pressured. The cost side declined clearly. During the reporting period, the company achieved operating income of 1,141 billion yuan, a decrease of 26.16% compared to the same period of the previous year (after merger and adjustment of enterprises under the same control, same below), achieving net profit attributable to shareholders of listed companies of 307 million yuan, a decrease of 47.44% from the same period last year, mainly due to insufficient downstream demand in the company's specialty integrated circuit business. The decline in product sales volume and unit price led to a year-on-year decrease in sales revenue and net profit; financial expenses were -11,757,796.42 yuan, a decrease from the same period of the previous year 1227.99%, mainly due to changes in exchange gains and losses due to changes in the US dollar exchange rate; sales expenses were $44,036,448.23, a decrease of 45.32% compared with the same period last year, mainly due to a decrease in accrued performance bonuses and marketing expenses.
Business performance was stable in 2023, continuing to strengthen R&D to consolidate its leading edge in the industry. In 2023, the company achieved operating income of 7.565 billion yuan, an increase of 6.26% over the same period of the previous year; net profit attributable to shareholders of listed companies was 2,531 billion yuan, down 3.84% from the same period last year. Net cash flow from operating activities was $1,772 million, up 2.63% from the same period last year. As of December 31, 2023, the company's net assets attributable to shareholders of listed companies were 11.654 billion yuan, an increase of 20.11% over the same period last year. During the reporting period, the company continued to strengthen technological capabilities and consolidate its leading edge in the industry. The annual R&D investment was 1,633 billion yuan, an increase of 30.68% over the same period last year, accounting for 21.58% of revenue; a total of 149 patents were granted throughout the year.
The year-on-year decrease in operating cash flow, financing cash flow, contract liabilities, etc. during the reporting period, net cash flow from operating activities was -271,977,076.75 yuan, a decrease of 252.63% from the same period of the previous year, mainly due to the company's smart security chip business receiving large advance payments in the same period of the previous year, and the year-on-year decrease in sales repayments in the current period; net financing cash flow was -670,270.55 yuan, a decrease of 614.16% from the same period last year, mainly due to changes in bank acceptance bill guarantees for the previous year. Jin Jing Recovery; the book value of the contract debt was 538,191,393.15 yuan, a decrease of 30.06% from the beginning of the period. This is mainly due to the fact that the company's smart security chip business orders for some pre-payment orders at the end of the previous year were fulfilled in the current period, and the advance payment for the current period was reduced.
The development of multiple series products is progressing smoothly, helping the company to develop the company's three major product lines for a long time in the future, bringing new business growth points to the company. The newly developed special Nand Flash has been introduced to the market, and the development of a new special memory has been completed; network and interface products continue to be upgraded, making it one of the companies with the widest range of categories in the industry. System-level chips represented by special SoPC platform products have been widely recognized by users. The fourth-generation products have completed early program promotion and can be applied in various fields.
The newly expanded RF-SOC products have also been validated by core customers to meet application requirements in specific fields.
Special processor series products such as general-purpose MCUs, image AI smart chips, and digital signal processor DSPs have been developed and selected by users. The development of products such as high-end MCUs and video processing chips is progressing smoothly. The company and partners have jointly launched an eSIM one-stop solution that supports wafer-level personalized data writing, is compatible with remote eSIM configurations and 5G connections, and has obtained GSMA's SAS-UP qualification certificate.
Actively expand the new product spectrum to ensure the company's future sustainable development. The company continues to strengthen research and development of miniaturized, high-frequency, high-precision products and key common technologies for industrialization. The SMD1612OSC ultra-small oscillator and other products have been successfully developed, and the “High Fundamental Frequency Quartz Crystal Oscillator for 5G Communication Modules” industrialization project successfully passed the inspection, empowering the company's high-quality development. On February 7, 2024, the “Bill on Foreign Investment and Related Transactions” was reviewed and passed, and it was agreed that Tangshan Guoxin Jingyuan Electronics Co., Ltd., a wholly-owned subsidiary of the company, will invest in the construction of an ultra-miniature quartz crystal resonator production base project in Chenglingji New Port Area, Yueyang City, Hunan Province. The total investment of the project is 355 million yuan. After completion, the project will achieve an annual output of 768 million units (design capacity) of ultra-miniature quartz crystal resonators.
Investment advice and profit forecasting
With the launch of the company's new series of special integrated circuit products and the accelerated development of overseas markets for smart security chips, the company's core competitiveness and profitability will continue to improve. Considering factors such as product price fluctuations, we have made the following adjustments to the company's profit forecast. The company's net profit for 2024-2026 is estimated to be 2,793 billion yuan, 3.274 billion yuan, and 3,943 billion yuan, respectively, and EPS of 3.29 yuan, 3.85 yuan, and 4.64 yuan respectively. Corresponding to the current PE stock price, it is 17.80 times, 15.18 times, and 12.61 times, respectively, giving a “buy” investment rating.
Risk warning
Downstream model volume falls short of expectations; technology development falls short of expectations