Shijia Photons(SH:688313) Southwest Securities·2024-04-21 06:32Investment Rating - The report gives a "Hold" rating for the company, indicating a cautious approach towards investment in the near term while recognizing potential long-term growth opportunities [38]. Core Insights - The company, Shijia Photon (688313), focuses on the optical communication industry, with a comprehensive business model that includes optical chips and devices, indoor optical cables, and cable materials. The company has established a full-process business system covering chip design, wafer manufacturing, chip processing, and packaging testing [4][52]. - In 2023, the company reported a revenue of 750 million yuan, a decrease of 16.5% year-on-year, and a net profit loss of 47.55 million yuan, a decline of 174% year-on-year. The decline in revenue is attributed to reduced demand for core products and price decreases in the optical chip and device segment [38][25]. - The company has seen a significant drop in gross margin, with the overall gross margin for 2023 at 18.6%, down 26.1% year-on-year. However, there are signs of recovery in Q1 2024, with a gross margin increase to 24.1% [38][25]. Summary by Sections Company Overview - Shijia Photon was established in 2010 and went public in 2020. The company emphasizes continuous investment in R&D for optical chips and devices, aiming to master core technologies in the optical electronics sector [52][53]. Financial Analysis - The company's revenue fluctuated from 550 million yuan in 2019 to 900 million yuan in 2022, driven by increased demand in the global access network market and data center construction. However, in 2023, revenue fell to 750 million yuan due to various macroeconomic and industry factors [25][38]. - The net profit for 2023 was a loss of 47.55 million yuan, primarily due to decreased revenue and a significant drop in the net profit margin of the optical chip and device segment [25][38]. Product and Market Analysis - The main business segments include optical chips and devices, indoor optical cables, and cable materials, with optical chips and devices consistently accounting for over 40% of total revenue from 2020 to 2023 [26][29]. - The company has maintained a stable gross margin for indoor optical cables at 14.2%, while the gross margin for cable materials increased to 18.3% due to a higher proportion of automotive cable materials [26][30]. R&D and Innovation - R&D expenses increased from 59.6 million yuan in 2019 to 96.03 million yuan in 2023, with a R&D expense ratio of 12.7% in 2023, reflecting the company's commitment to innovation [37][38]. - The company has achieved significant milestones in developing various optical components and has accumulated 266 intellectual property rights, including 44 invention patents [37][38]. Future Outlook - The report anticipates a recovery in demand for optical chips and devices, driven by the growth of AI and data center requirements, with projected revenue growth rates of 30% for the next three years [38][55]. - The company is expected to improve its gross margin gradually, with forecasts indicating a rise to 24% by 2026 [38][55].