Description of the event
On April 29, 2024, Nanxin Technology announced the “2024 First Quarter Report”. With 2024Q1, the company achieved operating income of 602 million yuan, +110.68% YoY, +4.75% month-on-month, achieved net profit of 101 million yuan, +224.79% YoY, and +23.91% month-on-month, and realized net profit of 100 million yuan without return to mother, +226.69% YoY, and +32.80% month-on-month.
Incident comments
The off-season in the first quarter was strong, and performance continued to grow. In the first quarter of 2024, the company achieved operating income of 602 million yuan, +110.68% year on month, +4.75% month on month, net profit of 101 million yuan, +224.79% year on month, and +23.91% month on month, realized net profit without return to mother of 100 million yuan, +226.69% year on year, +32.80% month on month, gross margin of 42.57%, +1.34pct year on month. Benefiting from the recovery in demand, the continuous collection of goods from clients and the continued expansion of the company's key products and markets in the early stages, Nanxin Technology's off-season in the first quarter was not weak, and its performance continued to grow.
Continue to strengthen research and development. The company attaches great importance to investment in R&D and continues to strengthen the R&D team to help expand and upgrade the company's product line. For 2024Q1, Nanxin's R&D expenses were 90 million yuan, +58.56% year-on-year, and the R&D cost ratio was 14.92%; by the end of 2023, the number of R&D personnel in the company reached 378, accounting for 65.40% of the R&D personnel.
In 2023, the company added 29 new authorized invention patents, and added 7 core self-developed technologies, including lithium battery monitoring, zero-voltage switch charge pump control, low voltage autostart, soft switch Flyback with fully integrated secondary control, Smart High Side Driver, automotive-grade smart fuse, and automotive antenna LDO, and successfully implemented applications in products.
A leader in the charge pump industry, the business can be expected to grow from point to point. On the product side, the company continues to expand product categories based on providing end-to-end complete solutions; at a time when charge pump chips lead the technological innovation and development of the industry, the company has achieved coverage of a series of power management products such as general charging management chips, DC-DC, charging protocol chips, wireless charging management chips, AC-DC chips, and lithium battery management chips. Client, based on mobile phone brand customers, the company provides customers with overall charging link products. While customers of well-known mobile phone brands such as HOVM contribute core revenue sources, the company continues to make efforts in other consumer electronics, industrial and automotive fields. From point to point, the business can be expected to grow definitively in the medium to long term.
We estimate that the company's net profit for 2024-2026 will be 363, 519, and 692 million yuan, respectively, and the corresponding EPS will be 0.86, 1.23, and 1.63 yuan, respectively, maintaining the “buy” rating.
Risk warning
1. Product development and technological innovation risks;
2. Risk of declining profitability due to increased competition in the industry.