Incidents:
On December 15, 2023, Intel released the Intel Core Ultra processor for AI PCs in China. AI is reshaping the PC market. Recently, Xinhai Technology also released products such as EC/PD/BMS/USBHub for AI PCs. The company will develop products based on PC performance improvement needs, focusing on key indicators such as processor performance, power consumption, and memory size, to enable innovation and development in the fields of personal computing, cloud computing, and edge computing at home and abroad.
Comment:
The consumer electronics boom picked up, and the company's performance improved. In the first three quarters of 2023, the company achieved cumulative revenue of 284 million yuan, a year-on-year decrease of 41.56%; realized net profit attributable to mother - 88 million yuan; realized net profit deducted from mother - 105 million yuan. Revenue for the third quarter was 126 million yuan, down 14.80% year on year, up 31.15% month on month; net profit to mother was -018 million yuan, reducing losses from month to month; net profit without deduction to mother was -0.23 million yuan. The improvement in the company's performance was mainly due to the recovery in industry sentiment. In particular, batch shipments of EC chips and PD protocol chips for consumer-grade laptops made a significant contribution to the third quarter results.
New products expand new markets, and the company's product line is continuously improved. Based on “analog signal+MCU”, the company actively develops products in various fields such as analog signal chains, MCUs, and health measurement AIOT. 1) In the field of analog signal chains, the company is expected to ship BMS products in batches next year, mainly for consumer electronics such as laptops; 2) In the MCU field, the company's first MCU chip supporting the UCFS fusion agreement has begun large-scale shipments, and is about to enter leading domestic companies for verification; 3) In the field of health measurement AIOT, the company is deeply involved in Hongmeng Ecology and successfully introduced 211 Hongmeng Smart Link project opportunities, covering 28 product categories such as body fat scales, accounting for 6.1% of the market share. . The company's major breakthroughs in diverse industries such as BMS, PC, automotive electronics, industrial measurement and control, and intelligent instruments have laid the foundation for long-term development.
Deep participation in Hongmeng led performance growth, and the equity incentive plan showed confidence in development. With the continuous launch of new products and the recovery of market demand, the company is further deeply involved in the construction of the Hongmeng ecosystem. The company's product shipments and revenue are expected to grow rapidly in 2024, bringing new opportunities for the company's performance growth. In addition, the company announced the 2023 restricted stock incentive plan, which is based on 23 year revenue. The 24-28 revenue growth requirement is not less than 40%/80%/130%/200%/300%, demonstrating the company's confidence in future development.
Profit forecast and investment rating: We expect the company's net profit to be -0.97/0.07/97 billion yuan in 2023/2024/2025, respectively, and the corresponding PE in 2024/2025 will be 809/58 times. Considering that the company is expected to benefit from Hongmeng's development, enter a period of rapid expansion, cover for the first time, and give it a “buy” rating.
Risk warning: AI PC implementation falls short of expectations, competitive landscape deteriorates, customer demand falls short of expectations