Downstream recovery combined with business integration, rapid revenue growth
In the first quarter of 2024, the company achieved revenue of 123 million yuan (year-on-year growth rate of 205.94%, month-on-month growth rate -7.20%) and net profit to mother of 0.49 million yuan (year-on-year growth rate -191.09%, month-on-month growth rate of 30.47%). The company's revenue grew significantly, mainly affected by the recovery in the consumer electronics market, and customer demand increased significantly compared to the same period last year.
The company increased its voice coil motor driver chip business compared to the same period last year. Since the voice coil motor driver chip business is in a transition stage, the company confirmed voice coil motor driver chip business revenue according to the net amount method, which contributed little to the company's overall revenue.
If revenue includes the entire voice coil motor driver chip business, the total shipment amount for all product lines in the first quarter of 2024 was RMB 265 million, an increase of 560.42% over the same period last year. Among them, the company's product line voice coil motor driver chip business shipped 155 million yuan, increasing R&D investment to the main growth point of shipment volume during the same period, focusing on cloud computing and automotive chip R&D
The company continues to expand its R&D team. The number of R&D personnel reached 184 by the end of 2023, an increase of 52 over 2022. The company has a large number of R&D personnel overseas. Referring to the local salary level, its labor costs are relatively high, increasing the company's per capita R&D expenses. The company's overseas R&D team mainly includes two research directions. One is research on advanced server architectures and SOC power architectures, and the other part is the development of automotive chip products, including automotive high/low side switches, high-performance LDO, and PMICs with complete functional safety.
To improve the battery life of AI mobile phones, silicon anode DC-DC chips are expected to open up growth space. With their advantages such as high energy density and high ratio in lithium battery applications, silicon-based anodes have already been applied in markets such as power batteries and consumer electronics. In addition to Tesla promoting the commercialization of 4680 batteries using silicon-based anodes, car companies such as Mercedes-Benz, BMW, Porsche, and Volvo are also following suit. Mobile phone brands such as Xiaomi and Honor have also innovatively used silicon-carbon anodes in new products released in 2023.
The HL7603 launched by Xidiwei is a DC-DC chip specially designed for silicon anode lithium-ion batteries. It makes full use of the additional capacity of silicon anode batteries in the 3.4V to 2.7V voltage range, greatly improving the battery life of AI phones equipped with HL7603 compared to traditional lithium battery phones. The company believes that no other product has been found on the market to meet the technical requirements of low Vin threshold and high output current at the same time, so it is expected to take the lead in the market with the HL7603. At the same time, the product's optimized performance in other single-battery portable applications such as mobile and wearable devices, tablets, and accessories will further expand its subsequent application scenarios and provide a broad market space.
Investment advice
Assuming that the company maintains high investment in R&D and gradually releases new products, driving a slight recovery in gross margin, while carefully anticipating the company's voice coil motor driver chip business consolidation progress, the company is expected to achieve net profit of -179 million yuan, -95 million yuan, and 24 million yuan respectively in 2023-2025. The PE corresponding to the current stock price (2024/5/14) is -25.21, -47.52, and 187.26 times, respectively. The company's reserves of AI server power supplies and silicon anode power chips are expected to contribute more elasticity than expected to the company's performance in the long term and maintain a “buy” rating.
Risk warning
Risk of weak downstream consumption, risk of customer concentration, risk of new product development falling short of expectations, risk of increased industry competition