1Q24 performance slightly exceeded our previous expectations. Guanghetong released its quarterly report for 2024: the company achieved operating income of 21.Crouchingtigerhiddendragontheswordofdestiny. 2.3 billion yuanCrouchingtigerhiddendragontheswordofdestiny, an increase of 17.11% over the same period last year; realized net profit of 188 million yuan, an increase of 33.78% over the same period last year; and net profit of 174 million yuan, an increase of 27.35% over the same period last year, slightly exceeding our previous expectations. We judge that the main reasons are: 1) accelerated recovery of PC and pan-IoT demand; 2) increase in income tax plus input tax and deductive tax on software products, driving other income up 162.53% to 2% year-on-year.Crouchingtigerhiddendragontheswordofdestiny, 8.25 million yuan. The development trend is that the Internet of things continues to expand, and the high-quality vertical market maintains rapid growth. 1Q24's revenue increased 17.11% year-on-year to 2.123 billion yuan, which we judged was mainly due to the gradual recovery of downstream demand such as PC and IoT, as well as vehicle modules.CrouchingtigerhiddendragontheswordofdestinyThe momentum of development is good. According to the fact that Counterpoint,1Q24 global PC shipments achieved positive growth for the first time after eight consecutive quarters of decline, an increase of 3% over the same period last year, we believe that driven by the recovery of the PC market and a steady increase in the built-in rate of cellular communication modules, the company is expected to achieve steady growth in PC communication module business in 2024. In addition, according to the company announcement, the 5G module AN768 launched by the company in 2023 was officially mass-produced and delivered in a domestic new energy brand, the car 5G R15 module passed the three compulsory European certification, and the core cockpit products passed the AEC-Q104 specification certification. We believe that with the company's customer expansion and rich product matrix, vehicle business is expected to maintain high-speed growth momentum. The certainty of the expansion of the number of Internet of things connections is strong. According to the number of cellular Internet of things connections in GSMA,2023, the number of cellular Internet of things connections is expected to reach 5.8 billion in 2030. We are optimistic that the company will benefit for a long time by relying on the continuous technology accumulation in the communication module field and the leading layout of the high-quality vertical market. Improve profitability, continue to invest in R & D to enrich the product matrix. 1Q24's return net profit margin increased to 8.8% year-on-year, of which, due to fluctuations in the product structure in a single quarter, 1Q24 gross profit margin increased to 21.5% year-on-year; expense rate remained basically stable, 1Q24 sales / management / R & D expense rate year-on-year-0.10%/+0.15pct/+0.36pct to 2.5%, 2.0%, 8.7%. We saw that through continuous R & D investment in the layout of intelligent modules / 5G/ vehicle modules and other fields, during the Mobile World Congress MWC 2024, the company released LTE intelligent module SC208 and RedCap module FM330 series based on MediaTek T300 platform; during the 2024 German embedded exhibition, the company released a series of Linux edge AI solutions based on a variety of intelligent modules. We believe that the company's continuous enrichment of product layout will help to grasp the long-term development dividend of the Internet of things industry. Profit forecast and valuation We basically maintain the profit forecast of 714 million yuan / 882 million yuan in 2024 / 2025. The current share price corresponds to 17.4 times 2024 / 2025 / 14.1 times Pmax E. Maintain an outperform industry rating and target price of 24.03 yuan, corresponding to 25.8 times of 2024 / 2025 / 20.9 times of Pdeband E, which has 48% upside space compared with the current stock price. The penetration rate of the Internet of things at risk is lower than expected, the shipments of notebook cellular modules are not as expected, and the vehicle preloading business is not as expected. [disclaimer] this article only represents the views of a third party and does not represent the position of Hexun. Investors operate accordingly, at their own risk.
[disclaimer] this article only represents the views of a third party and does not represent the position of Hexun. Investors operate accordingly, at their own risk.
