Description of the event
On April 24, 2024, the company released its 23 annual report & 2014 quarterly report: the company achieved revenue of 2.47 billion yuan in 23, -6.9% year on year; realized net profit of 65 million yuan, or -49.5% year on year; realized deducted non-net profit of 37 million yuan, or -62.5% year on year.
In 24Q1, the company achieved revenue of 574 million yuan, +29.6% year on year; realized net profit to mother of 06 million yuan, -64.3% year over year; realized deduction of non-net profit of 0.05 billion yuan, -60.7% year over year.
Incident comments
Changes in product structure in 23 years led to an increase in gross margin, and increased R&D expenses put pressure on performance. The company achieved revenue of 2.147 billion yuan in 2008, or -6.9%. Among them, revenue in the intelligent connected vehicle sector maintained a rapid growth trend. The overall demand in the traditional IoT industry was relatively stable, while the FWA sector showed a downward trend due to changes in existing customer structure and demand. In addition, the company's overseas market revenue share is increasing, from 23.66% in '22 to 30.56% in '23, achieving revenue of 656 million yuan, an increase of 20.27% over the previous year; the domestic region achieved revenue of 1,491 billion yuan, a year-on-year decrease of 15.29%.
Achieved a return of 65 million yuan, or -49.5% over the same period last year. The company's gross profit margin for 23 years was 19.16%, +1.3 pct. Mainly due to changes in the structure of shipped products, the share of shipments of automotive products, 5G products, high-computing power products, and high-margin products from overseas customers increased. The net profit margin was 2.92%, or 2.6 pct year on year. The main reason was that the company continued to increase R&D and sales expenses. The sales/management/finance/R&D expenses ratio was 2.8%/2.6%/0.5%/9.3%, respectively, +0.6 pct/+0.1 pct/-0.5pct.
Demand from various business segments picked up in 23Q1, which had a structural impact on the decline in gross margin. 24Q1 revenue was 574 million yuan, +29.6% year over year; attributable to mother of 06 million yuan, -64.3% year over year. The company's Q1 revenue rebounded markedly. The trend continued to improve. Overseas revenue growth accelerated, and domestic revenue returned to a growth trajectory. From an industry perspective, demand is picking up in the three major fields of intelligent connected vehicles, FWA, and IoT. Among them, demand from overseas customers is even stronger for FWA and IoT. The company's Q1 gross profit margin was 15.69%, -6.9pct year on year, mainly due to 1) the impact of the shipping structure, centralized shipment of some products with low gross profit levels; 2) the increase in shipments of products related to intelligent connected vehicles, and the gross margin decreased compared to the same period last year. The net profit margin was 1.0%, -3.0pct, and the sales/management/finance/R&D expenses ratio was 2.3%/2.2%/1.2%/8.4%, respectively, -0.6pct/-0.7pct/-0.5pct/-1.5pct.
Intelligent module iteration produces high-computing power AI module products, which are quickly recognized by the industry and customers. With the improvement of module hardware capabilities, the weight reduction of general models, and the continuous introduction of large models in the small-parameter industry, a trend of shifting various generative AI programs represented by large models from cloud processing to the edge side and terminal side has taken shape. The company's R&D team also made unremitting efforts to run the Stable Diffusion large model on the company's high-computing power AI module for the first time, and successively supported a series of major language models such as LLaMA-2, Tongyi Qianwen, Baichuan Big Model, RedPajama, ChatGlm2, and Vicuna, reflecting the company's R&D team's R&D strength in integrated software and hardware development, overcoming new technologies and implementing new scenarios. It also expanded the capability boundaries of high-computing power modules, laying a solid technical foundation for generative AI applications on the module side.
Profit forecast and investment suggestions: The company's 24Q1 revenue rebounded significantly, overseas growth accelerated, and the domestic economy returned to a growth trajectory. Among them, FWA and IoT came from stronger demand from overseas customers, and the company increased investment in FWA and IoT. It is expected that this trend will continue. Affected by the shipping structure, the company's Q1 gross margin was slightly under pressure in the short term. Looking ahead, high-computing power AI module products are expected to bring new growth to the company. The company's net profit for 2023-2025 is estimated to be 1.28/1.67/ 215 million yuan respectively, up 99%/30%/29% year-on-year, corresponding PE is 45/35/27 times, maintaining a “buy” rating.
Risk warning
1. Market development and market competition risks in the field of wireless communication modules and solutions; 2. Risk of loss of core technicians and leakage of core technology.