Event: The company released the 2023 Annual Report and the 2024 First Quarter Report. In 2023, the company achieved operating income of 370 million yuan, an increase of 27.3% over the previous year, and achieved net profit of 100 million yuan to mother. In the first quarter of '24, the company achieved revenue of 90 million yuan, an increase of 34.4% over the previous year; net profit to mother was -0.1 billion yuan.
Downstream demand warms up, and an inflection point in performance is evident. The company's revenue increased by 52.2% and 34.4% year-on-year respectively in Q4 and Q1 in '23, and net profit to mother both reduced losses. The main reasons were the gradual recovery in smartphone market demand in the second half of '23, the sharp recovery momentum from falling inventory levels, and the company's continued promotion of share growth strategies and the release of fund-raising capacity. The company's sales volume of MEMS acoustic sensors/pressure sensors/inertial sensors increased by 43.7%, 192.3%, and 39.9% respectively throughout '23. Demand is expected to continue to grow as the global economy recovers and downstream inventory levels fall.
Gross profit margin increased month-on-month, and expenses were well controlled. Competition in the sensor industry was fierce in '23, so the company's overall gross margin declined from an all-time high, achieving a gross profit margin of 16.8% for the whole year and 22.1% for 24Q1. However, as demand in the consumer electronics market picked up in the second half of 23 and the company's share of sales of high-margin products increased, the company's gross margin picked up somewhat. The company's gross margin increased by 1.6 pp and 9.8 pp month-on-month in the 23Q3 and Q4 quarters, respectively, with a clear upward trend. In terms of expenses, the company's four comprehensive expenses rate in '23 was 39.1%, a year-on-year decrease of 1.6 pp. Among them, the R&D expenses ratio was 20.9%, a year-on-year decrease of 2.9 pp. By the end of 2023, the company had 93 domestic and foreign invention patents and 300 utility model patents. While ensuring continuous investment in R&D, the company demonstrated good cost control capabilities.
The promotion of new products has shown results, and it is expected to become a new growth point. The company's various new MEMS sensor products continue to achieve customer breakthroughs: in terms of micropressure differential sensors, the company promotes and applies the accumulated MEMS differential pressure sensor technology in electronic atomizer products. In the field of products with high smoke volume, high safety, and compliance with new regulations, the company's unique digital products have advantages that are difficult to achieve with traditional products, and can be shipped in large quantities to brand customers; in terms of barometers, waterproof barometer products developed by the company for the wearable and sports products market have been recognized by leading domestic customers and established good cooperative relationships. It is shipped in batches and gradually promoted to other customers and ODM markets; in terms of accelerometers, the company continues to optimize the accelerometer chip process and increase the yield of accelerometer chips. The product has made good progress among downstream customers, and shipments have been further increased.
Profit forecast and investment suggestions: The company's 2024-2026 EPS is expected to be -0.16 yuan, 0.84 yuan, and 1.79 yuan, respectively, and the corresponding PE is -229 times, 45 times, and 21 times, respectively. The company is one of the few domestic enterprises that have mastered the design and manufacturing process capabilities of various types of MEMS chips. With the release of new products and the release of production capacity, future performance is expected to grow further. Refer to comparable company valuations, and for the first time, the company was given a “holding” rating.
Risk warning: Risks such as new product development falling short of expectations, weak downstream demand, and falling short of expectations in product promotion.