Description of the event

On April 26, 2024, Shengbang Co., Ltd. announced the “2023 Annual Report” and the “2024 First Quarter Report”. In 2023, the company achieved revenue of 2,616 billion yuan, -17.94% year-on-year, and net profit of 281 million yuan, or -67.86% year-on-year. With 2024Q1, the company achieved revenue of 729 million yuan, +42.03% YoY, -0.75% month-on-month, and net profit to mother of 54 million yuan, +80.04% YoY.

Incident comments

The off-season in the first quarter was strong, and operations grew steadily. With 2024Q1, the company achieved revenue of 729 million yuan, +42.03% YoY, -0.75% month-on-month, net profit of 54 million yuan, and +80.04% YoY. Benefiting from the continuous recovery of consumer electronics and demand driven by demand after the end of the release of the industrial sector, the company's off-season in the first quarter was not weak, and performance increased significantly year-on-year. In terms of gross margin, gross margin for the first quarter was 52.49%, -0.18pct year over year, and +5.27pct month-on-month. After 5 consecutive quarters of decline, gross margin saw a month-on-month improvement.

Sluggish demand in 2023 weighed on results. In 2023, the company achieved revenue of 2,616 billion yuan, -17.94% year on year, net profit to mother of 281 million yuan, -67.86% year on year, gross margin of 49.60%, year-on-year -9.38pct; in 2023, due to industry withdrawals and increased competition, the company's overall revenue and profit declined, but benefited from multiple material and downstream sector coverage, and operations still showed strong steadiness. By product, the revenue of signal chain and power management was 8.70 billion yuan and 1,746 billion yuan respectively, accounting for 33.25% and 66.75% of revenue, respectively. The revenue share of power management chips increased; on the gross margin side, the gross margins of signal chain and power management were 56.64% and 46.10%, respectively, compared to -8.27pct and -9.31pct.

Simulation leaders continue to strengthen R&D and product capabilities to build long-term growth. Despite the overall pressure on the industry in 2023, the company continued to strengthen R&D; R&D expenses were 737 million yuan, +17.78% year-on-year, and the R&D expenditure rate was 28.18%; there were 1,029 R&D personnel, +14.84% year-on-year, accounting for 72.72% of R&D personnel. During the reporting period, the company continued research and development in the fields of automobiles, industry, consumer electronics, etc., launching the industry's ultra-low power operational amplifiers and comparators, high-precision current detection amplifiers, ultra-low power step-up DC/DC converters, high-precision low-noise instrumentation amplifiers, high-current LDO with high interference resistance in a small package, high-efficiency lithium battery chargers, 24-bit high-precision ADCs, high-dynamic logarithmic current-voltage converters, multi-channel AMOLED display power supply chips, high-precision voltage reference circuits, high-precision temperature sensors, and micro More than 900 new products, including high-precision power consumption current sensors. As of the 2023 annual report, the company's products cover 32 product categories and more than 5,200 sales numbers; rich product categories build the company's core competitive advantage.

I am optimistic about the company's continued growth under the recovery in demand and the continuous expansion of product categories. Shengbang Co., Ltd. is committed to becoming a leading brand in the world's analog chip industry. With the continuous expansion of the company's product numbers and the continuous development of downstream application fields, the company can be expected to grow sustainably in the medium to long term. Net profit due to mother for 2024-2026 is estimated to be RMB 4.06, 6.91, and RMB 1,025 million, respectively, maintaining a “buy” rating.

Risk warning

1. Market competition increases risk;

2. The risk of new product development and promotion falling short of expectations.