Zhongke Lanxun released its 2023 annual report. In 2023, the company achieved operating income of 144.68874 million yuan, an increase of 33.98% over the same period in 2022; net profit to mother was 251.6932 million yuan, an increase of 78.64% over the same period in 2022; deducted non-net profit was 173.8479 million yuan, an increase of 55.02% over the same period in 2022.
Key points of investment
Expanding product categories boosted both sales and gross profit, and net profit increased significantly in 2023
The company achieved net profit of 251.6932 million yuan in 2023, an increase of 78.64% over the same period in 2022. In 2023, the company continued to increase investment in R&D, promote iterative upgrades of the original chip, continuously improve the chip's performance, comprehensive cost performance and market competitiveness, and successfully launched the “Blue Sky Dragon” series high-end Bluetooth chips BT889X, BT892X, BT893X and BT895X, which have excellent performance and cost performance advantages. At the same time, the company plans new product research and development based on market demand, continuously optimizes the product structure and expands the scope of product applications on the basis of deep cultivation in the field of wireless audio chips. In 2023, the company completed mass production and marketing of OWS headphone chips, smart watch chips, wireless microphone chips, and digital BLE SoC chips, and continued to upgrade smart Bluetooth audio chips, wearable chips and various algorithm solutions. By promoting technological upgrading and expanding the company's product categories, the company's share of sales of high-end products increased in 2023, and both product sales volume and comprehensive gross margin increased, thus contributing to a significant increase in net profit.
Fully tap the existing market potential and better adapt to the needs of terminal brand customers
In 2023, the company sold more than 1.4 billion wireless audio chips, accounting for a high market share. The continuous improvement in performance, cost reduction, and differentiated design of product forms and application scenarios of electronic products such as TWS, non-TWS Bluetooth headsets, and Bluetooth smart speakers are conducive to stimulating users to buy new products, increasing the exchange rate and per capita holdings. Terminal brands have begun to join the competition in the middle and low end cost-effective markets, and the user purchase threshold has been further lowered. In order to better meet the needs of terminal brand customers focusing on cost-effective series products, the company further improves the performance of the main control chip integration, power consumption, connection, transmission, etc. on the premise of ensuring comprehensive cost performance, improving the software and hardware design plan of the smart Bluetooth audio chip system to better meet smart Bluetooth applications, so that the company's products can continue to penetrate terminal brand customers. As of April 2024, the company's products have entered the supply system of terminal brands such as Xiaomi, Magic, Realme, Beisz, Rambler, Tencent QQ Music, Voice, Magic Blue, Philips, Nokia, Motorola, Lenovo, Iron Triangle, Himalaya, BOat, Noise, Walmart, iFLY, TCL, etc.
Open up new market areas and expand downstream application scenarios
On the basis of consolidating the TWS and non-TWS Bluetooth headsets and Bluetooth smart speaker businesses, the company uses its advantages and customer resources to continuously incubate new products and technologies, open up new market areas, broaden sales channels, and expand downstream application scenarios. The company closely follows market trends, seizes IoT development opportunities, and gradually realizes large-scale production of next-generation Bluetooth IoT chips, Wi-Fi chips and Wi-Fi Bluetooth integrated chips through “IoT chip product development and industrialization projects” and “Wi-Fi Bluetooth integrated chip development and industrialization projects”, greatly optimizing and improving the performance and intelligence of the company's related chips, which can effectively meet the wireless connection and intelligent control of different physical nodes, and adapt to various application scenarios such as outdoor environment broadcasting, public broadcasting, smart homes, etc. With the smooth progress of the company's fund-raising investment projects, the company's product line will expand further horizontally and vertically in the future, and the downstream application scenarios and customer range will expand accordingly.
Profit forecasting
It is predicted that the company's revenue for 2024-2026 will be 18.67, 23.50, and 2,935 billion yuan respectively, and EPS will be 2.88, 3.80, and 4.69 yuan respectively. The current stock price is 19.4, 14.7, and 11.9 times PE, respectively. The company promoted the iterative upgrading of the original chip and the expansion of product categories through continuous strengthening of R&D investment, increasing the company's product sales volume and comprehensive gross margin in 2023, contributing to a significant increase in net profit. At the same time, the company fully exploited the existing market potential to better meet the main interests of terminal brand customers Demand for cost-effective series products, cultivate the IoT market through layout, expand downstream application scenarios, and maintain a “buy” investment rating.
Risk warning
Market competition increases risk, new product release falls short of expected risk, downstream market demand recovery falls short of expected risk, and technology iteration risk.