Bank of China International **shares*** Su Lingyao, Li Shengxuan recently conducted research on Dongxin shares and released a research report "Downstream downturn drags down performance, foreign investment opens up a new world of IoT", this report gives a ** rating to Dongxin shares, the current stock price is 2132 yuan.
Dongxin Co., Ltd. (688110).
The company released a 2023 performance forecast, with a loss in 23 years, but the company continues to deepen the storage market, and at the same time plans to invest in the expansion of wireless communication Wi-Fi7 products, maintaining the "** rating."
Key points in support of the rating.
Affected by multiple factors such as the global economic environment and industry cycles, the performance in 23 years was under pressure, and the demand recovery was slow. The company expects net profit attributable to the parent company to be -3 in 20233 billion -29 billion yuan, a year-on-year loss, deducting non-attributable net profit of -35 billion yuan -31 billion yuan, a year-on-year loss; In a single quarter, the median net profit attributable to the parent company in 23Q4 was -16.4 billion yuan, a year-on-year loss widened by 07.8 billion yuan, the month-on-month loss increased by 09.3 billion yuan. The median net profit after deducting non-attributable to the parent company is -17.3 billion yuan, a year-on-year loss widened by 08.2 billion yuan, the month-on-month loss increased by 09.6 billion yuan. The above-mentioned business conditions are mainly due to: 1) market demand has fallen, industry competition is fierce, sales of some products have declined significantly, and gross profit has decreased sharply year-on-year 2) the company has made provision for inventory impairment, asset impairment loss increased year-on-year, and the net profit attributable to the parent is expected to improve to a certain extent if the corresponding impairment is added. 3) Continue to invest in R&D, and R&D expenses increased by more than 50% year-on-year.
SLC NAND continues to make efforts, and diversified products are waiting for the industry to recover. 1) SLC NAND: The company continues to develop new products on the 28nm and 24nm processes, and conducts product research and development on more advanced processes based on 1xnm. 2NOR Flash: The company's new products are continuously developed based on 48nm and 55nm processes. At present, SLC NAND Flash and NOR Flash have passed the AEC-Q100 test, and the company will continue to develop new high-reliability products under the strict environmental standards for automotive-grade applications, expand the richness of the automotive-grade product line, and actively test and introduce products on the client. 3) DRAM: The company has enriched its product portfolio on the basis of DDR3(L) products and LPDDR series products, and the company's product diversity has been continuously improved.
The establishment of a subsidiary specializing in Wi-Fi 7 wireless communication is expected to show synergies. Company 2On the 1st, it was announced that it intends to invest in the establishment of a holding subsidiary with its own funds of 29 million yuan - Shanghai Yixin Synaesthesia Technology Co., Ltd. Based on strategic planning considerations and business development needs, it plans to invest in R&D to engage in the research and development, design and sales of Wi-Fi7 wireless communication chips.
Valuation. Although the company's performance is under pressure in the short term, considering that the company continues to deepen the storage market and has a long-term layout of foreign investment, there is a large room for performance growth. Considering the downturn in the downstream economy in 2023, combined with the company's 2023 performance forecast disclosure, we expect the company to achieve revenue of 5 in 2023, 2024 and 2025 respectively58/6.89/10.1 billion yuan, and the net profit attributable to the parent company was -302/1.33/2.2.6 billion yuan, corresponding to PE in 2023-2025 is -336/76.6/44.9 times. Maintain the "** rating.
Key risks to the rating.
The risk of intensified competition in the industry, the risk of product research and development falling short of expectations, the risk of downstream demand falling short of expectations, and the progress of investment projects falling short of expectations.
*According to the calculation of the research report data released in the past three years, the research team of Huaxin ** Mao Zheng has conducted in-depth research on the stock, and the average accuracy of the past three years is 2128%, and its ** attributable net profit in 2023 is a profit of 22.5 billion, and the **PE converted according to the current price is 431。
The latest profit** breakdown is as follows:
A total of 6 institutions have rated the stock in the last 90 days, with 3 ratings ** and 3 overweight ratings.
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