Incident: The company released its 2023 annual report, and achieved revenue of 887 million yuan, +15.54% year over year; net profit to mother of 210 million yuan, +37.37% year over year; net profit after deduction of 178 million yuan to mother, +37.68% year over year.
Comment:
Continuing to consolidate customer resources and product performance advantages, benefiting from the recovery of consumer electronics: The company officially entered Samsung Electronics' supplier system in 2010, competed with well-known international companies such as TI in international business, and accumulated extensive development experience. Based on the quality requirements of international customers, the company has formed excellent R&D capabilities and a strict quality control system, gradually formed a good market reputation, and passed supplier certification for mainstream consumer electronics brands such as Xiaomi, LG, and Wingtech. At present, the company's terminal customers have covered well-known domestic and foreign consumer electronics brands such as Samsung, Xiaomi, LG, Wingtech, and Haier, forming a significant customer advantage. In terms of product reliability, through thorough testing and assessment of products at different stages, the company ensures that the product maintains stable performance in different application environments, so that the online failure rate (DPPM) (that is, the number of failures per million products) of the company's products produced on customer production lines is far lower than customer requirements. Demand for consumer electronics has gradually picked up since '23, especially in the second half of the year. According to IDC data, global smartphone shipments increased 7.8% year over year to 289.4 million units in Q1; Q4 and Q3 in '23 increased 8.5% year over year and declined 0.1%, respectively. We believe that with the recovery of the downstream consumer electronics market, the company's main products such as LDO and OVP are expected to return to high growth.
Continue to develop strong signal chain products and expand categories in the industrial control and automotive fields: Signal chain products are the company's key product line to expand the market in the future. The company has launched a variety of products with advanced international performance indicators in 23 years, and has accelerated the promotion of serialized products and begun to form sales. In the future, the company will continue to invest in R&D and technical strength in signal chain products, optimize the product structure, and gradually achieve the goal of providing customers with complete solutions. At the same time, we will increase investment in the industrial sector and automotive sector, continue to enrich product categories, accelerate customer coverage, and promote balanced development of the overall revenue structure.
Overseas markets drive rapid growth in the digital detonator business: the company's subsidiary SEMIKENT (38.49% shareholding ratio)'s intelligent networking delay management unit had 23 million yuan in revenue of 112 million yuan, an increase of 54.23% over the previous year. The business is developing smoothly in overseas markets, while maintaining a high level of domestic prosperity, and is expected to maintain high growth in 24 years.
Profit forecast, valuation and rating: We continue to be optimistic about the company's development potential. Considering the recovery in the consumer electronics boom and the company's excellent customer resources, we slightly raised the 24-year net profit forecast from 251 million yuan to 260 million yuan, keeping the 25-year profit forecast unchanged, and adding the 26-year net profit forecast of 373 million yuan, corresponding to the 24-26 PE of 22/17/15X, respectively. Considering the company's low valuation level and business development prospects, we maintained a “buy” rating.
Risk warning: The recovery in the consumer electronics boom fell short of expectations, the degree of deterioration in the competitive landscape of the simulated industry exceeded expectations, and customer concentration risks.