First-quarter results maintained steady growth. The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved revenue of 7.72 billion yuan, an increase of 36.7% over the previous year, and realized net profit to mother of 550 million yuan, an increase of 54.6% over the previous year. In terms of sales volume, the company's main business communication module products achieved sales volume of 39.2 million yuan in 2023, an increase of 27.0% over the previous year; the average shipping price of products increased 6.6% to 19.16 billion yuan. Driven by good growth in the fields of Ruiling Wireless and Metrology as well as automotive and FWA, the company achieved continuous revenue and profit growth in 2023. In the first quarter of 2024, the company achieved revenue of 2.12 billion yuan, an increase of 17.1% year on year; realized net profit of 190 million yuan, an increase of 33.8% year on year. The first quarter results maintained a steady growth trend.
Gross margin increased significantly in 2023. The gross margin of the company's wireless communication module products in 2023 was 23.1%, an increase of 3.3 pct over the previous year. The main driving factors include the scale effect of automotive and CPE product lines, as well as strengthening the supply chain and integration of R&D resources after the merger of Ruiling Wireless. In the first quarter of 2024, the company's consolidated gross margin was 21.5%, a slight increase of 0.6 pct over the previous year.
Continue to deeply cultivate large particle markets such as PCs, automotive and gateways. The company is a leader in the vertical module industry and is deeply involved in large-scale markets such as PCs, automotive and gateways. In the PC sector, according to Canalys data, 2024Q1 global PC market shipments increased 3.2% year on year and resumed growth; in 2024, demand for business and education scenarios is expected to continue to recover due to AI PC applications and the catalytic switching cycle. In the automotive sector, domestic market companies are expected to benefit from the expansion of new customers and the increase in the penetration rate of 5G products, while the overseas market remains stable through the Ruiling wireless layout. In terms of the FWA market, according to Dell'Oro's forecast, spending on 4G and 5G-enabled FWA routers and gateways is expected to reach $4 billion by 2027, and is expected to continue growing.
Continue research and development, establish an intelligent computing product line, and focus on the application of mowing robots. The company continues to invest in R&D, with an R&D expenditure rate of 9.2% in 2023. The company is actively deploying smart module products and will launch smart module products such as SC151-GL, SC228, and SC171 in 2023. The company has set up a special intelligent computing product line, using the smart lawnmower segment as a breakthrough point to provide binocular sensing and positioning modules, decision algorithms, and edge computing power modules that integrate communication capabilities, and provide a full-stack solution for intelligent lawnmower robots.
Risk warning: Development in vehicles, FWA, etc. fell short of expectations; market competition intensified; demand recovery fell short of expectations; edge AI applications fell short of expectations.
Investment advice: The overall global macroeconomic situation is still under some pressure. Demand recovery in some segments is lagging behind. Based on this 2024-2025 forecast, the 2026 profit forecast was added. The company's net profit for 2024-2026 is expected to be 7.1/8.7/1.04 billion yuan, respectively (previously estimated net profit to mother for 2024-2025 was 76/ 90 million yuan, respectively), and the corresponding PE is 18/14/12 times, respectively. The company's PC modules are expected to recover, and automotive and FWA modules will continue to grow, and actively lay out fields such as computing power modules and robots. They are optimistic about the company's growth and maintain a “buy” rating.