Description of the event
On April 25, 2024, Nanochip announced the “2023 Annual Report” and the “First Quarter Report 2024”. In 2023, the company achieved operating income of 1,311 million yuan, -21.52% year on year, net profit to mother - 305 million yuan, -221.85% year on year; 2024Q1, the company achieved operating income of 362 million yuan, -23.04% year on year, +16.89% month on month, and net profit to mother - 150 million yuan.
Incident comments
Revenue continued to improve month-on-month in the first quarter, and a large percentage of investment weighed on performance. With 2024Q1, the company achieved operating income of 362 million yuan, -23.04% YoY, +16.89% month-on-month, net profit to mother of 150 million yuan, gross margin of 31.99%, YoY -13.11pct, and +1.40pct month-on-month. In the first quarter, demand for automotive electronics grew steadily and the consumer electronics boom continued to improve the company's revenue from month to month; however, increased competition in the industry put pressure on the company's product sales prices, the accumulation of talent during the downturn in the industry, and the persistence of large proportions of investment, putting pressure on the company's overall performance level.
Industry competition+inventory removal, putting pressure on the overall 2023 performance. In 2023, the company achieved operating income of 1,311 billion yuan, -21.52% year on year, net profit to mother -305 million yuan, -221.85% year on year, gross margin of 38.59%, year-on-year -11.42pct. Judging from the company's product structure, sensor, signal chain and power management respectively accounted for 12.71%, 54.10%, and 32.81% of the company's total revenue in 2023, +6.05pct, -8.59pct, +2.25pct.
Continue to focus on pan-energy and automotive sectors, and actively explore overseas markets. In 2023, the company's automobile, pan-energy, and consumer electronics revenue accounted for 30.95%, 59.52%, and 9.51%, respectively, compared to +7.82pct, -10.17pct, and +2.33pct; during the reporting period, the automobile market demand stabilized+gradual recovery of customer demand after leaving the warehouse+continued introduction of new clients, and the share of automobile revenue increased significantly year-on-year; the share of revenue declined due to the removal+ gradual recovery of the pan-energy industry, photovoltaic, energy storage and other markets; the share of revenue declined; the share of revenue declined; consumer electronics boom recovery+temperature and humidity sensor signal conditioning Chips, etc. With the launch of this product, the share of consumer electronics has increased. While focusing on the target market, the company has increased its global layout, set up branches in key regions such as Japan, South Korea, and Germany, completed overseas sales team building, and achieved continuous expansion of overseas market share. The company's overseas revenue in 2023 accounted for 12.35%, +2.2 pct compared to the previous year.
Focusing on the three product directions of sensors, power management and signal chains, the product range continues to expand. The company is carrying out key research and development work in the three product directions of sensors, power management, and signal chains, and now has more than 1,800 product numbers that can be sold. As an enterprise that mass-produced digital isolation chips on an earlier scale in China, the company has a very complete range of isolation devices, and has expanded products to develop various categories such as enhanced isolators on standard digital isolators. During the reporting period, the company launched various signal chain and power management products such as voltage standards, gate drivers, LED drivers, power supply LDO, and power path protection. Furthermore, the pressure sensor chip in the company's integrated sensor chip can cover the full range from low pressure to medium to high pressure. Sensor signal conditioning ASIC chips have covered various categories such as pressure sensors, silicon microphones, acceleration sensors, current sensors, and infrared sensors. The company has the ability to cover products from consumer grade, industrial grade to automotive grade.
Short-term fluctuations do not disrupt long-term growth, and endogenous externalities create the company's core competitive advantage. As downstream markets such as consumer electronics, automobiles, industrial control, and digital energy gradually resume pulling goods and adding new products one after another, we believe that the company's medium- to long-term growth is safe. Net profits to the mother are expected to be -2.11, 0.57, and 271 million yuan respectively in 2024-2026, maintaining a “buy” rating.
Risk warning
1. Industry competition increases risk;
2. The customer introduction of the product falls short of the expected risk.