Core views:
The company published an annual report for '23 and a quarterly report for '24. The company achieved operating income of 7.565 billion yuan in '23, an increase of 6.26%; net profit to mother of 2,531 billion yuan, a year-on-year decrease of 3.84%; net profit after deducting net income of 2,391 billion yuan, a year-on-year decrease of 2.88%. In 24Q1, the company achieved operating income of 1,141 billion yuan, a year-on-year decrease of 26.16%; net profit to mother was 307 million yuan, a year-on-year decrease of 47.44%; net profit after deduction was 227 million yuan, a year-on-year decrease of 58.34%.
Continue to lay out key areas and lead the industry. The company has been deeply involved in the field of integrated circuit design for more than 20 years and has become one of the leading domestic integrated circuit design companies. In terms of special integrated circuits, the company's FPGA products continue to maintain a leading position in the industry market. The newly developed special NandFlash has been introduced to the market, and the development of the new special memory has been completed; in terms of smart security chips, sales revenue and profits have increased dramatically, and the domestic market position has risen; in terms of crystals, it continues to expand key areas such as network communications, automotive electronics, and industrial control, and the domestic market share has increased.
Continue to strengthen technological empowerment and enhance the company's core competitiveness. R&D investment in '23 was 1,633 billion yuan, an increase of 30.68% year over year. According to the company's annual report, in terms of special integrated circuits, the company successfully developed and promoted new industrial-grade product lines and irradiation-resistant product lines, special memories, special special processors, special FPGAs and system-level chips; in terms of smart safety chips, the company established a vehicle-grade product development and management process system that conforms to the highest “ASIL D” level of automotive functional safety, and collaborated with Intel to develop Strongbox and release the world's first eSIM solution customized for smart POS; in terms of crystals, small-size, high-frequency products developed and industrialized Continued progress has been made to achieve mass production of OSC differential ultra-high fundamental frequency products based on Q-MEMS.
Profit forecasting and investment advice. The company's 24-26 EPS is expected to be 3.30, 4.12, and 4.84 yuan/share. Taking into account the company's growth and profitability, referring to comparable companies, the company was given a PE valuation of 35 times in 2024, corresponding to a reasonable value of 115.62 yuan/share, maintaining a “buy” rating.
Risk warning. The growth of the industry falls short of expectations, the supply of upstream production capacity falls short of expectations, and the development progress of new projects falls short of the expected risks.