Incident: In 2023, the company achieved operating income of 21.021 billion yuan (YoY +4.69%), net profit of 556 million yuan (YoY -43.89%), and net profit of non-return to mother of 138 million yuan (YoY +43.70%).
1Q24 achieved revenue of 5.644 billion yuan (YoY +30.18%); net profit attributable to mother of 558 million yuan (YoY +180.50%); net profit after deducting non-attributable net income of 566 million yuan (YoY +2476.81%). The revenue scale of the company's semiconductor design product sales business rebounded year on year. In particular, in the second half of the year, the revenue scale was close to the historical high of the quarter, and gross margin declined year on year, mainly due to pressure on the prices of some products during the inventory removal process, and gross margin was greatly affected. Looking at the breakdown, the image sensor solutions business revenue was 15.536 billion yuan, accounting for 74.10%, up 13.61% year on year; the company's touch and display solutions business revenue was 1,250 billion yuan, accounting for 5.96%, a year-on-year decrease of 14.97%; and the company's analog solutions business revenue was 1,154 billion yuan, accounting for 5.51%, a year-on-year decrease of 8.56%.
CIS: The share of mobile phones has increased, and the scale of automotive electronics shipments continues to rise. The company's new 50 megapixel and above image sensor products were successfully mass-produced and delivered in the third quarter of 2023, injecting new factors into the company's product revenue growth from the smartphone market. Product structure optimization helped the company steadily increase the value and profitability of its products. In the field of smartphone applications, the company's 50 megapixel and above products (including 64 megapixel, 100 million pixel, etc.) contributed more than 60% to revenue. In 2023, the company's image sensor business revenue from the smartphone market rose from 5.397 billion yuan to 7.779 billion yuan in 2022, an increase of 44.13% over the previous year. With advanced and compact automotive CIS solutions, the company covers a wide range of automotive applications, including ADAS, in-cab monitoring, electronic rearview mirrors, dashboard cameras, rearview and panoramic images. The image sensor business's revenue from the automotive market increased from 3,633 billion yuan to 4,547 billion yuan in 2022, an increase of 25.15% over the same period last year.
Touch and display solutions: Slightly pressurized. Due to fluctuations in the supply and demand relationship in the market, the sales price of the company's touch and display chips declined by a certain margin. Shipments reached 133 million units, an increase of 65.33% over the previous year, and the market share increased significantly.
Simulation Solution: Acquire to expand the product line. The company completed the acquisition of Xinlite and expanded its automotive analog chip development team in Tianjin, and further expanded the analog solution product layout. The company will continue to promote the product layout of automotive analog chips, promote the verification and introduction of various products such as CAN/LIN, SerDes, PMIC, and SBC, and contribute new growth points to the growth of analog solutions.
Profit forecasts and investment recommendations. We believe that as the world's leading CIS chip leader, the company has a certain market share in the mobile CIS market. The automotive CIS and security business continues to grow at a high rate, and is expected to form a second growth curve in the future. At the same time, the platform-based layout structures the third curve, and the ceiling is expected to open up. We expect Weil's 2024-2026 EPS to be 2.09, 2.84, and 4.01 yuan, respectively. Considering the valuation level of comparable companies and the growth of the regional market where the company is located, the 24-year PE valuation range is 50-55x, corresponding to a reasonable value range of 104.5-114.95 yuan, maintaining a “superior to the market” rating.
Risk warning. The development of new products may require significant R&D support, there is a shortage of production capacity in foundries, and market competition is intensifying.