Maintaining the “increase in holdings” rating, the target price for the upgrade is 80 yuan. Maintain the company's 2023-2025 EPS forecast of 1.5/2.01/2.69 yuan. Considering the continuous improvement of the company's consumer electronics product line, it will continue to benefit from the return of domestic brand phones and the recovery of the consumer electronics industry. It will be given 40 times PE in 2024, and the target price will be upgraded to 80 yuan, maintaining the “increase in holdings” rating.
Performance improved significantly in 3Q23, with a year-on-year increase in single-quarter revenue and net profit. The company achieved operating income of 635 million yuan in the first three quarters, +3.27% year-on-year, and net profit of 119 million yuan, or -23.42% year-on-year. The company's Q3 performance improved markedly. Revenue and net profit increased year on year, achieving operating income of 262 million yuan, +82.99% year on year; net profit of 500 million yuan, +79.55% year on year. The company's Q3 gross profit margin was 44.19%, +0.62% yoy and +2.83% month-on-month.
The company continues to increase investment in R&D and continuously consolidate its technological and product advantages. In 3Q23, R&D expenses were 33 million yuan, accounting for 12.79% of operating income.
The return of domestic brands of mobile phones has boosted the recovery of the industry, and the company's consumer electronics business continues to benefit. According to IDC data, the decline in Chinese smartphone market shipments narrowed for two consecutive quarters, with 67.05 million units shipped in Q3, -6.3% year-on-year. Although the overall shipment volume is still declining, along with the launch of a number of hot new products since August, the popularity of the domestic smartphone market has rebounded, and consumer demand has clearly picked up. The actual retail volume of domestic mobile phones in Q3 is already +0.4% compared with the same period last year. As a new cycle of switching gradually begins, the company, as one of the main power management suppliers for consumer electronics, will benefit from the centralized launch of new branded mobile phone products, and revenue will continue to grow.
catalysts. The recovery of domestic brand phones is accelerating; the company's product matrix continues to expand.
Risk warning. The recovery of domestic brand phones fell short of expectations; the company's introduction of new products fell short of expectations.