occurrences

Shengbang Co., Ltd. released its 2023 annual report and report for the first quarter of 2024: in 2023, the company achieved operating income of 2,616 billion yuan, a year-on-year decrease of 17.94%; realized net profit of 281 million yuan, a year-on-year decrease of 67.86%; realized net profit deducted from non-mother of 212 million yuan, a year-on-year decrease of 74.99%. In 2024, Q1 achieved operating income of 729 million yuan, a year-on-year increase of 42.03%; realized net profit of 54.3834 million yuan, an increase of 80.04% over the previous year; realized net profit deducted from non-mother of 504.536 million yuan, an increase of 713.11% over the previous year.

Key points of investment

Revenue was under pressure in the short term, and there was an improvement in the first quarter

Domestic and foreign economies were sluggish in 2023, and the global semiconductor integrated circuit industry was in a downward cycle. Demand was sluggish and sales were slowing down. Most segments were still in a contraction and adjustment cycle, and only some segments, such as new energy vehicles, showed growth. The company's main business is the development and sale of analog integrated circuits. The integrated circuit design industry has stable growth capacity and strong resistance to cycles. In 2023, in an environment where overall demand for semiconductors was low, the company still achieved revenue of 2,616 billion yuan, a slight decrease of 17.94% over the previous year. The first quarter of 2024 achieved revenue of 729 million yuan, an increase of 80.04% year over year, showing an improvement trend. The company's performance is expected to continue to improve in 2024 as demand for artificial intelligence, high-performance computing, and new energy vehicles continues to grow and the consumer electronics market picks up.

Strengthen core technology and expand product categories

The company has strong independent R&D strength and innovation capabilities. It has continued to increase R&D investment for more than ten years. In 2023, the company invested 737 million yuan, accounting for 28.18% of revenue, an increase of 17.78%; R&D personnel accounted for 72.72% of the total number of employees, an increase of 14.84% year on year; applied for 230 new patents and launched more than 900 new products with completely independent intellectual property rights, which can be widely used in industrial control, automotive electronics, communication equipment, consumer electronics and medical devices. In 2023, the company launched new products that meet market needs, such as high-precision voltage benchmarks, ultra-low insertion loss, high-isolation, high-bandwidth dual-channel differential analog switches, bidirectional charge pumps, high-efficiency DC/DC step-down chips with ultra-fast transient response based on self-developed AHP-COT-FB architecture, 8-channel 14-bit 1MSPS low power ADC, etc., covering a wide range of product categories.

Consolidate upstream and downstream resources and strengthen brand influence

As a fabless semiconductor company (Fabless), the company attaches great importance to maintaining stable and continuous strategic cooperation with suppliers. Since its inception, it has developed business cooperation and maintained good cooperative relationships with TSMC, the company's main wafer manufacturer. The packaging and testing service providers are mainly world-leading packaging and testing manufacturers such as Changdian Technology, Tongfu Microelectronics, and Huatian Technology. In addition, the integrated circuit test center planned and built by the company in Jiangyin City, Jiangsu Province, is progressing smoothly as planned, and the project will undertake some testing services after delivery. The company uses a sales model of “distribution as the main focus and direct sales as a supplement”, which is conducive to improving the efficiency of the sales process. The company's products serve more than 100 market segments and thousands of customers. While expanding existing market areas, the company actively lays out in application fields such as the Internet of Things, new energy, artificial intelligence, etc., develops new related core products, seizes market opportunities, expands market share, continues to expand domestic and foreign customer base, and enhance brand influence.

Profit forecasting

The company's revenue for 2024-2026 is 32.35, 40.22, and 4.906 billion yuan, respectively, and EPS is 0.98, 1.57, and 2.05 yuan respectively. The current stock price is 78.4, 48.8, and 37.6 times PE, respectively. The company is deeply involved in analog integrated circuit chip design, and its performance in the first quarter of 2024 increased significantly year-on-year. The company continues to expand its product categories and maintain a “buy” investment rating.

Risk warning

Macroeconomic risks, risk of product development falling short of expectations, risk of increased industry competition, risk of downstream demand falling short of expectations