In 2023, Qizhong Technology's display driver chip business revenue was 1,463 billion yuan, YoY +25%. The company ranked third in the global display driver packaging and testing field. The company continues to expand the power management and RF front-end chip packaging and testing business in the non-display driver chip business, and the second growth curve is gradually taking shape. Maintain an increase in holdings rating.
Key points to support ratings
Qizhong Technology's 2023Q4 and 2024Q1 revenue maintained relatively rapid year-on-year growth. Qizhong Technology's 2023Q4 revenue was 482 million yuan, QoQ +5%, YoY +44%; gross profit margin 38.4%, QoQ-1.3 pcts, YoY+2.9pcts; net profit after deducting non-return to mother was 124 million yuan, QoQ +9%. Qizhong Technology's 2024Q1 revenue was 443 million yuan, QoQ -8%, YoY +44%; gross profit margin of 33.8%, QoQ-4.6pcts, YoY+5.3pcts; net profit without return to mother was 73 million yuan, QoQ -41%, YoY +169%.
The display driver chip packaging and testing business ranked third in the world, and the AMOLED DDIC business grew steadily. In 2023, Qizhong Technology's display driver chip packaging and testing business revenue was 1,463 billion yuan, YoY +25%. In 2023, the company was the highest-grossing display driver chip packaging and testing company in China, ranking third in the global display driver chip packaging and testing field. With the rapid penetration of AMOLED products in smart phones and other fields, the company's AMOLED revenue ratio reached 20% in 2023, showing a gradual upward trend. At present, the company has 28nm AMOLED-related packaging and testing technology reserves, which also provides an important guarantee for expanding production of related products.
The non-display driver chip business continues to expand. In 2023, Qizhong Technology's non-display driver chip business revenue was 130 million yuan, YoY +8%. The company gradually expanded its business into the field of non-display chip sealing and testing, mainly power management chips and RF front-end chips, and continued to expand its technical product line, making continuous efforts in the fields of new processes and products, and expanding to the upper end of the value chain. The company has accumulated high-quality customer resources at home and abroad, such as SiLijie, Jewart, and Nanxin Semiconductor.
valuations
Qizhong Technology's 2024/2025/2026 EPS is expected to be 0.35/0.39/0.44 yuan, respectively. As of April 30, 2024, the total market value of Qizhong Technology was about 13.3 billion yuan, corresponding to about 32.3/28.3/25.2 times the 2024/2025/2026 PE. In view of the increase in the AMOLED business share, we slightly raised the company's profit forecast for 2024.
Taking into account the risk of a price war in the DDIC sector, we slightly lowered the company's profit forecast for 2025. Maintain an increase in holdings rating.
The main risks faced by ratings
The recovery in market demand fell short of expectations. The development and verification of new products fell short of expectations. The competitive landscape in the market deteriorated.