Xinhai Technology is a full signal chain chip design enterprise integrating sensing, calculation, control, and connectivity. It focuses on the development and design of high-precision ADCs, high-performance MCUs, measurement algorithms, and one-stop solutions for the Internet of Things. Based on its industry leading edge in analog signal chain+MCU dual engine drives, the company enriches product layout and expands market applications.
In 2023, the company achieved revenue of 433 million yuan, a year-on-year decrease of 29.91%; net profit to mother was 143 million yuan, which turned into a year-on-year loss. In the first quarter of 2024, the company achieved operating income of 151 million yuan, up 145.42% year on year, up 1.51% month on month; net profit to mother - 35 million yuan, reducing losses year on year.
The BMS and PC sectors continued to expand, and downstream demand recovery boosted results in the first quarter of '24. In the BMS field and PC sector, the company launched a series of new products at the end of 2022 and 2023, and gradually began increasing quantities in 2023. In the first quarter of 2024, related products continued to maintain a good shipping trend. Among them: single-section BMS resumed mass shipments, and new 2-5 BMS products also achieved mass shipments; the revenue of EC and PD series chips used in computers and surrounding areas increased by about 170% year on year. On the other hand, with the recovery in consumer electronics demand, industry inventories bottomed out, and demand for the company's traditional MCU products, health measurement products, and AIOT-related products is also steadily picking up.
Master core technology and continuously achieve breakthroughs. After 20 years of development, Xinhai Technology continues to develop and innovate in the field of high-precision ADCs and high-reliability MCUs, and has mastered many core technologies, including high-precision ADC design technology, high-reliability MCU design technology, low temperature drift, and high-precision reference source technology. Based on these core technologies, the company launched the first high-precision 24-bit Sigma-Delta ADC in China. Currently, the accuracy of the ADC has reached the leading domestic and international advanced level; it has launched a 32-bit MCU with built-in USB PD3.0 fast charging protocol, which is more integrated than Cypress products, and has been used by leading domestic customers. A notebook motherboard controller chip was launched. Compared with products from overseas companies, it has a higher degree of integration and better security, and has been used by leading customers. A variety of automotive-grade MCU chips were launched and introduced to the client.
Profit forecasting, valuation and ratings: Taking into account the slow recovery of the simulation and MCU industry, we lowered the forecast values of the company's net profit to mother in 2024 and 2025 by -50 million yuan (loss compared to the previous forecast) and $0.27 billion (down 84% compared to the previous forecast), and added a 2026 performance forecast. We expect the company's revenue for 2024-2026 to be 681, 9.39, and 1,232 million yuan, respectively, and net profit to mother of -0.50, 0.27, and 113 million yuan, respectively. The current market value corresponds to the 25-26 PE, which is 169 and 40 times, respectively. Considering that the company's revenue has picked up significantly in the first quarter of 2024, the company's PC and BMS products are in a leading position in the country, and competitiveness has been further enhanced, and we maintain the company's “buy” rating.
Risk warning: Downstream demand recovery falls short of expectations; new customer imports fall short of expectations.