Incidents:
The company released its 2023 annual report. In 2023, the company achieved operating income of 520 million yuan, an increase of 25.41% year on year; net profit to mother of 65 million yuan, up 21.04% year on year; net profit after deducting 51 million yuan, an increase of 64.16% year on year.
Comment:
2023Q4's revenue and net profit to mother grew rapidly, and leading brand customers continued to be introduced.
2023Q4 achieved revenue of about 144 million yuan, a year-on-year increase of 34.32% and a decrease of 8.29%; net profit to mother of 0.18 million yuan, an increase of 255.84% year-on-year and a decrease of 18.41% month-on-month; net profit after deduction of 15 million yuan, turning a year-on-year loss into a profit, a decrease of 29.43% month-on-month. The company actively promotes the layout and development of scenario-based products, and the penetration rate of leading brands is steadily increasing.
Bluetooth speaker head brand penetration rate has increased, and product structure optimization has increased gross profit margin. The company's penetration rate of leading brands in the Bluetooth speaker market continues to increase, and revenue from the Bluetooth speaker series is growing rapidly; at the same time, various new products continue to be released, driving the full development of the low-latency wireless audio segment. The smartwatch market has performed brilliantly, and the sales revenue of new products has increased dramatically. The company's product structure has been continuously optimized, unit sales costs have decreased, and the share of sales of high-margin products has increased. 2023Q4 gross margin was 45.56%, an increase of 8.90 pcts over the previous year.
Demand for edge AI computing has increased, fueled by end-side AI processors. Demand for edge AI computing in low-power end-side devices is increasing, and the company's end-side AI processor chips were first applied to audio products to meet the growing demand for intelligent terminal devices. The company built high computing power for smart audio and smart wearable products under an extremely low power consumption budget, and upgraded the SoC chip to a three-core AI heterogeneous core architecture based on CPU, DSP, and NPU. Currently, the latest generation of high-end AI audio chips based on SRAM memory calculation has been released, and it is expected that sample chips will be supplied to downstream customers in mid-2024. With the implementation of AI technology in end side devices, end side AI processor chips are expected to become an important growth pole for the company's performance.
Profit prediction and rating: The company has been working in the field of smart audio chips for many years. As the edge computing power of end-side devices increases, the company is optimistic about the long-term growth of the company. The revenue for 2024-2026 is expected to be 6.94, 9.00, and 1,155 billion yuan respectively, and net profit to mother is 0.90, 1.17, and 155 million yuan respectively. The corresponding PE is 36, 28, and 21 times, respectively, giving a “gain” rating.
Risk warning: profit forecasting and valuation, downstream demand falls short of expectations, industry competition intensifies