Key points of investment:
The company achieved operating income of 28.57 yuan in 2023, an increase of 15.08% over the previous year; net profit to mother was 0.14 million yuan, reversing the loss year on year, after deducting the non-net profit of 6074 million yuan, which reversed the loss year on year. In addition, the company's 2024 quarterly report achieved operating income of 8.37 yuan, a year-on-year increase of 84.31%; net profit to mother of 0.14 million yuan, reversing year-on-year losses; and deducting non-net profit of 0.2 billion yuan, reversing year-on-year losses.
Adhere to the three-legged development direction and build a second growth curve for high-end smartphone products. The company's 2023 business structure included smart security consolidated revenue of 1,671 billion yuan, up 0.41% year on year, accounting for 58.49% of main business; consumer electronics revenue of 892 million yuan, up 50.4% year on year, accounting for 31.21% of main business; consolidated revenue of automotive electronics was 294 million yuan, up 30.45% year on year, accounting for 10.3% of main business. In the field of smart security, the company continues to maintain its leading position in the global market and achieve steady business growth. In the smartphone field, cooperation between the company and existing customers in various product fields continues to deepen, and the market share continues to increase. In particular, many XS series 50M products were successfully mass-produced. These products are mainly used in high-end flagship phones, such as main cameras, wide-angle, telephoto cameras, etc., and the unit price is high, opening up a second growth curve for the company's smartphone revenue. In the field of automotive electronics, the company continues to deepen cooperation with many mainstream car manufacturers, and the number of covered vehicle projects has increased dramatically.
High-end mobile phone products accelerate large-scale mass production. The company's mobile CIS products have become the second largest business, covering the mainstream demand of 8M-50M in the current market. In response to the demand for high-end flagship models, several XS series high-end products for flagship cameras and auxiliary cameras (including telephoto and wide-angle) have been shipped on a large scale. According to the company's official public account platform, in 2022, the company launched the first 50MP ultra-high resolution 1.0μm pixel size new product SC550XS, and the 52MP ultra-high resolution 0.7 μm pixel size product SC520XS. These two products were mass-produced in 2023.
In January 2024, the company launched the SS580XS, the first 50M 1/1.28 inch product, which is the same platform product as the 22nm HKMG Stack. Aiming at the mainstream smartphone CIS market, the company is also developing in-depth technical cooperation with domestic fabs, using technological innovations such as single-chip integration to launch the SC5000CS, a more cost-effective high-resolution product.
Further enrich the automotive AT Series product matrix. According to the announcement, the company has released a total of more than 10 products for the three major application scenarios of vehicle imaging, perception, and cabin, covering 1MP to 8MP automotive sensing and imaging segmented application requirements. Among them, the new 5MP high-resolution vehicle-grade SC533AT won the 2023 Sensor Product Award. The company's automotive CIS products have been mass-produced by major car manufacturers such as BYD, SAIC, Dongfeng Nissan, Great Wall, Ssangyong, Zero Sport, Chery, Guangzhou Automobile, Jiangling, and Geely. According to YOLE data, in 2022, the company ranked fourth in the world and second in the country in the automotive CIS market. Since 2021, the company has invested a large amount of resources to start the development of automotive CIS series products. The next two or three years will still be a market dividend period for automotive electronics.
Adjust profit forecasts to maintain a “buy” rating. According to the financial report update, we adjusted the company's 2024 net profit to the mother of 306 million yuan (previously 1,186 million yuan), and added the 2025-2026 net profit forecast to be 487/684 million yuan, corresponding PE is 64/40/29X. Refer to the comparable CIS company Weir Shares and Geke Micro's 2024 PE forecast to be 126X and 42X respectively, and the average forecast PE is 84X, maintaining the company's “buy” rating.
Risk warning: customer orders fall short of expectations; industry sentiment falls short of expectations; supply chain risks.