Incidents:
The company released its semi-annual report in August 2023. Revenue during the reporting period was 435 million yuan, or -12.96% year-on-year. Net profit to the mother was 110 million yuan, or -32.66% year-on-year, and basic earnings per share were 0.19 yuan.
Revenue and profit declined year over year
During the reporting period, in the integrated circuit sector, the company's product sales maintained good growth, but due to the design service project acceptance node, revenue was 250 million yuan, or -4.72% year-on-year; in the Beidou terminal and operation sector, orders for Beidou third-generation terminals and modules signed by the company increased significantly year-on-year, but delivery of second-generation terminal products declined year-on-year, with sector revenue of 98 billion yuan, -30.52% year-on-year. Affected by -12.96% year-on-year revenue and a 28.99% year-on-year increase in period expenses, the company's net profit to parent was -32.66% yoy.
Integrated circuits: Product technologies such as ultra-high speed digital-to-analog converters and clocks achieved breakthroughs in the integrated circuit sector, and the company's technology improved in various aspects during the reporting period. Among them, in terms of clocks and digital-to-analog converters, the company broke through key technologies such as ultra-high speed clocks, delayed phase-locked loops, ultra-high speed digital-to-analog converter cores, and high-speed interfaces, and broke through high-frequency integrated phase-locked loop clock distribution technology; in software radio, it broke through the core technology of high-speed continuous-time high-precision analog-to-digital converters and broadband correction algorithms, and completed the design and development of second-generation software radio products.
Beidou terminal and operation: promotion of Beidou third-generation products
During the reporting period, in terms of Beidou terminals, the company focused on expanding the market for products such as Beidou-3 receivers and module components. At the same time, the direction of high-precision positioning technology, anti-interference algorithms, and terminal integration technology was further improved. The company actively expands Beidou's comprehensive application scenarios, focuses on promoting Beidou operation services in hydrogeological surveys and other industries, and provides relevant units with Beidou third-generation communication cards, GNSS equipment, hardware development and platform operation and maintenance services.
Profit Forecasts, Valuations, and Ratings
Considering factors such as acceptance points and uncertainty in demand for the second generation of Beidou, we expect the company's operating income in 2023-2025 to be 12.01/15.82/19.79 (original value of 16.06/21.91/2,733 billion yuan), corresponding growth rates of 1.54%/31.76%/25.12%, respectively, and net profit of 2.58/383/497 million yuan (original value of 3.98/5.39/670 million yuan), corresponding growth rate of -13.92%/48.15%/29.96% , EPS was 0.46/0.68/0.88 yuan/share, respectively, and the 3-year CAGR was 18.34%. Referring to comparable companies, the company was given 50 times PE in 2023, with a target market value of 12.917 billion yuan and a corresponding stock price of 22.88 yuan, maintaining the “increase in holdings” rating.
Risk warning:
Product development progress falls short of anticipated risks; competition in the satellite navigation market intensifies; risk of shareholder litigation; risk of government subsidies falling short of expectations; risk of insufficient corporate cash liquidity.