The 24Q1 quarter revenue was -3.3% month-on-month, and net profit to mother reversed losses month-on-month. Performance was slightly lower than expected.

Revenue for the year 23 was 61,213 billion yuan, +5.4% year on year, net profit to mother of 1,181 billion yuan, -19.0% year on year, after deducting non-net profit of 1,127 billion yuan, -28.6% year over year, mainly due to weak consumer electronics market.

The 24Q1 quarterly revenue was 16.247 billion yuan, -3.3% month-on-month, net profit of 143 million yuan, and the month-on-month loss was reversed, after deducting non-net profit of -87 million yuan, and the month-on-month loss narrowed; gross profit margin was 9.20%, -3.03pct month-on-month, net interest rate 0.97%, +7.72pct month-on-month, after deducting non-net interest rate of -5.37pct month-on-month.

The losses in the ODM business narrowed month-on-month in the 24Q1 quarter, and the net profit of the semiconductor business increased 46.5% month-on-month.

1) The largest business is ODM (product integration) business, with revenue of 44.315 billion yuan in 23, accounting for 72% of revenue, gross profit margin of 8.37%, and net loss of 447 million yuan. 24Q1 The business had revenue of 12.42 billion yuan, -3.6% month-on-month, accounting for 76% of revenue, 3.0% gross profit margin, -2.86pct month-on-month, net loss of 350 million yuan, month-on-month loss reduction, mainly due to low consumer electronics demand, lower prices for some upstream raw materials, and rising factory labor costs. 2) The second largest business is the semiconductor business, with revenue of 15.226 billion yuan in 23, accounting for 25% of revenue, gross profit margin of 38.59%, and net profit of 2,426 billion yuan. 24Q1 The business had revenue of 3.42 billion yuan, -4.7% month-on-month, accounting for 21% of revenue, 31.0% gross profit margin, -2.81 pct month-on-month, and net profit of 520 million yuan, up 46.5% month-on-month. 3) The optical module business had a net loss of 719 million yuan in '23.

On December 2, 2023, the company issued an announcement deciding to stop the production of optical module products for specific customers.

Continue to focus on Anshi semiconductor leaders and actively cooperate with customers to expand applications in ODM+AI and other fields.

1) Semiconductor business: The revenue share of transistors (including protected ESD/TVS, etc.), MOSFET power tubes, analog and logic ICs in 23 years was 41%, 40%, and 15%, respectively. The company ranks first in the world in small-signal diodes and transistors in the world, number one in the world for ESD protection devices, number one for small-signal MOSFETs, and second in the world for automotive-grade power MOSFETs. 2) ODM business: In terms of mobile phones: We have successfully developed a number of European and North American operator customers, and are jointly developing AI mobile phones with overseas customers; in terms of notebook computers: AI PC projects produced in cooperation with customers have been mass-produced and sales began in early '24.

The leading power semiconductor company has broad room for future growth and has been downgraded to an “gain” rating.

According to Xinmou research data, Anshi Semiconductor ranked 5th in the world for power discrete devices in '23, ranking first in the country.

Due to factors such as low ODM business demand, price increases in the supply chain, and the cessation of production of optical module products for specific customers, the company's net profit for 2024 to 2026 is estimated to be 16.35/22.34/3,010 billion yuan respectively, corresponding to PE 25/18/13 times in 24/25/26. We downgraded the rating in the short term. As a leading manufacturer of power semiconductors and ODM, the medium- to long-term trend has not changed, giving it an “gain” rating.

Risk warning: macroeconomic fluctuations; international trade risks; increased market competition; R&D falls short of expectations, etc.