Amlogic(688099) 国信证券·2024-02-04 16:00Investment Rating - Buy rating maintained for the company [1][4] Core Views - Significant recovery in profitability in Q4 2023, with new product expansion progressing smoothly [1] - Q4 2023 revenue reached RMB 1.51 billion (YoY +31.9%, QoQ +0.2%), the second-highest in history for the same period [1] - Net profit attributable to shareholders in Q4 2023 was RMB 183 million (YoY +294.0%, QoQ +41.8%) [1] - Gross margin increased to 38.9% (YoY +3.1pct, QoQ +2.9pct), and net margin rose to 12.1% (YoY +8.1pct, QoQ +3.6pct) [1] - Full-year 2023 revenue was RMB 5.367 billion (YoY -3.2%), with net profit attributable to shareholders at RMB 497 million (YoY -31.6%) [1] - Excluding the impact of equity incentives, the adjusted net profit attributable to shareholders for 2023 was RMB 655 million [1] - The company expects further growth in Q1 2024 and the full year of 2024 [1] - R&D investment continues to strengthen, with R&D expenses reaching RMB 1.294 billion in 2024 (YoY +11.6%) [1] - Key products such as Wi-Fi chips have achieved cumulative sales of over 16 million units, with new products like Wi-Fi6 and 8K reaching commercial production [1] Financial Performance and Forecasts - 2023 revenue forecast adjusted to RMB 5.378 billion (previous estimate: RMB 5.651 billion) [1] - 2024-2025 revenue forecasts adjusted to RMB 6.812 billion and RMB 8.568 billion, respectively (previous estimates: RMB 7.545 billion and RMB 9.592 billion) [1] - 2024-2025 net profit forecasts adjusted to RMB 778 million and RMB 1.249 billion, respectively (previous estimates: RMB 947 million and RMB 1.427 billion) [1] - Current stock price corresponds to 23.3x and 14.5x PE for 2024 and 2025, respectively [1] - 2023 EBIT margin is 6.9%, expected to rise to 11.0% in 2024 and 14.7% in 2025 [2] - ROE for 2023 is 9.2%, expected to increase to 12.6% in 2024 and 16.8% in 2025 [2] - EPS for 2023 is RMB 1.20, expected to rise to RMB 1.87 in 2024 and RMB 3.01 in 2025 [2] Market and Industry Context - The company is a leading domestic smart terminal SoC design company [1] - The global consumer electronics recovery is progressing more moderately than previously expected [1] - Generative AI adoption in smart terminals will require time for product definition, design, and mass production [1] - The company is expanding its global customer base and enhancing customer loyalty, which is expected to drive further business improvement [1] Historical Performance - 2021 revenue was RMB 4.777 billion (YoY +74.5%), 2022 revenue was RMB 5.545 billion (YoY +16.1%) [2] - 2021 net profit was RMB 812 million (YoY +606.8%), 2022 net profit was RMB 727 million (YoY -10.5%) [2] - Gross margin in 2021 was 40%, declining to 37% in 2022 and 36% in 2023 [2]