Incident: The company released its 2023 annual report. In 2023, it achieved revenue of 281 million yuan, a year-on-year increase of 15.75%, and net profit to mother of 72 million yuan, a year-on-year decrease of 32.72%.
Key points of investment
Product and business structure optimization helped revenue grow steadily, and the profit side declined slightly. The company achieved revenue of 281 million yuan in 2023, a year-on-year increase of 15.75%, and net profit to mother of 72 million yuan, a year-on-year decrease of 32.72%. Revenue achieved steady growth, mainly due to continued growth in sales orders, strengthening the expansion of new products and new customers, ensuring product production and supply chain safety, and completing acceptance of on-hand orders as planned. On the profit side, the gross profit margin in 2023 was 83.12%, a year-on-year decrease of 4.76pct. The gross margin declined, mainly due to changes in product structure, and the share of sales of high-margin products declined. The company's cost rate increased during the 2023 period. The R&D cost rate was 45.25%, up 12.33 pct over the previous year. The company continued to increase R&D efforts and expanded the corresponding sales team, leading to an increase in R&D expenses, sales expenses, and management expenses. The net cash flow from operating activities in 2023 was $190 million, mainly due to an increase in cash payments made by the company to and to employees, and other cash payments related to operating activities.
The field of low-orbit commercial satellites has been comprehensively laid out, and the product matrix is constantly being enriched. In terms of power management chips, the company has developed a variety of highly integrated power modular products to meet the diverse power supply and distribution needs of customers. In terms of microsystems and modules, the company has developed and defined a variety of SIP component products for low-orbit commercial satellites, and with its excellent performance, it has further expanded the downstream satellite Internet market. In terms of high-speed and high-precision ADC/DAC chips, various chips such as multi-channel RF transceiver chips have been deployed, and some products have already entered the sample promotion stage.
Continue to increase R&D iterations and consolidate the leading position in the industry. The company attaches great importance to R&D and innovation. It has completed R&D iterations of several series of products, continued to increase R&D investment in high-speed and high-precision ADC/DAC chips and digital beamforming chips used in emerging fields such as low-orbit commercial satellites and next-generation digital array radars, and launched a variety of new products and models to meet the demand for high-performance and high-reliability technology in this field. As the core chip in the country's major equipment, the company's products have a high technical threshold. We believe that the company will maintain a leading position in related fields through continuous R&D investment and new product development, while improving product production efficiency and market supply capacity through industrial chain synergy, and performance is expected to maintain steady growth.
Profit forecast and investment rating: The company's performance is in line with expectations. Considering the company's leading position in the field of simulated RF chips in special industries and changes in downstream demand for RF front-end products, we lowered the company's net profit forecast values for 2024-2025 to 1.16/164 million yuan (previous value: 217/288 million yuan), respectively, and added a net profit forecast value of 223 million yuan for 2026. The corresponding PE was 68/48/35 times, respectively, maintaining the “buy” rating.
Risk warning: 1) The scale of operation is still relatively small; 2) the risk of performance fluctuations; 3) the risk of bad debts due to an increase in accounts receivable balances.