Xidiwei released the 2024 semi-annual report: in the first half of 2024, the company achieved revenue of 0.23 billion yuan, a year-on-year increase of 84.48%; realized net profit to mother -0.118 billion yuan, a year-on-year decrease of 0.158 billion yuan; realized net profit without deduction of 0.126 billion yuan, with a year-on-year increase of 0.041 billion yuan.

Key points of investment

Revenue is growing year-on-year, and downward pressure on prices has led to a decline in gross margin

In the first half of 2024, the consumer electronics industry recovered moderately, and the company's revenue showed a year-on-year growth trend, in line with changes in terminal market demand. In the analog chip market, competition tends to be intense. The “price for volume” trend in the market is obvious. Some of the company's old products are facing downward price pressure, and some new products with high gross margins take a certain amount of time to release. As a result, the company's gross margin declined year-on-year in the first half of the year.

It is proposed to acquire South Korea's Zinitix to further improve the existing product pattern. In July 2024, the company plans to acquire 30.91% of the shares of the Korean listed company Zinitix for 0.109 billion yuan. After the transaction is completed, Zinitix will become the company's holding subsidiary and included in the scope of the company's consolidated statements. In the first half of 2024, Zinitix achieved revenue of 29.783 billion won. Compared with full-year revenue of 33.068 billion won in 2023, revenue for the first half of the year alone was close to full-year revenue of 2023, with a significant increase. Net profit of 0.646 billion won was realized. Compared with net profit of 5.878 billion won for the full year of 2023, Zinitix turned a loss into a profit. Zinitix is one of the suppliers of consumer electronics products such as Samsung Electronics' smartphones. Zinitix will help the company broaden its technology and product layout, accelerate the expansion of product categories and downstream fields, and enhance the company's market competitiveness.

Expand and deepen customer cooperation and consolidate the company's operating foundation

Relying on leading domestic technical capabilities, the company has been highly recognized by many brand customers. The company's consumer and automotive-grade DC/DC chips, audio and data switch chips, and SIM card interface level conversion chips have entered the Qualcomm platform reference design, and lithium battery fast charging chips have entered the MTK platform reference design. At the same time, the company's products have been mass-produced and shipped to domestic and foreign brand customers such as Samsung, Vivo, Voice, OPPO, Xiaomi, Honor, Google, Logitech, and Lenovo, and are widely used in consumer electronics devices including various high-end flagship models. At the same time, they have also been shipped to automotive front-end manufacturers such as Joynext and Yura Tech, and eventually used in cars of many famous brands in China, Europe, Japan, and South Korea, such as Hongqi, Wenjie, and Changan. The company continues to deepen its cooperation with existing customers and actively expand new customers.

Profit forecasting

It is predicted that the company's revenue for 2024-2026 will be 0.491, 0.677, 1.393 billion yuan, and EPS will be -0.34, -0.03, and 0.11 yuan respectively. The current stock price corresponds to PE of -25.1, -252.0, and 75.7 times, respectively. Some of the company's old products are facing downward price pressure, while maintaining large R&D expenses, profit side pressure. As the consumer electronics industry recovers moderately, the company plans to acquire Zinitix in Korea to further improve the existing product pattern, expand and deepen customer cooperation, and maintain” “Increase in wealth” investment rating.

Risk warning

Macroeconomic risks, risk of product development falling short of expectations, risk of increased industry competition, risk of downstream demand falling short of expectations, risk of overseas acquisitions falling short of expectations.