20230911-招银国际-韦尔股份-603501.SH-Sequential_margin_contraction_indicates_inventory_digestions_may_persist_till_FY23E_6页_915kb

Willsemi (603501 CH) Report Summary

Date: September 8, 2023 (Based on the provided content)
Key Points:

• Revenue and Profit Decline: In 1H23, revenue was RMB8.9 billion, a 20% decrease YoY, while net profit was RMB153 million, down 93% YoY. Second quarter net profit remained negative, indicating ongoing margin contraction due to inventory adjustments.
• Margin Erosion: Gross margin fell to 17.3% in Q2 2023 from 24.7% in Q1 2023, primarily because of weak demand in the mobile and security market sectors. Inventory levels have decreased by 30% from a peak, but stock turnover (MOI) remains at 6 months.
• Future Outlook: The de-stocking process is expected to persist through the end of 2023, continuing pressure on margins. Recovery may start in 2024, with revenue increasing to double-digit levels by then. Cautious consensus suggests modest revenue decline for 2023, while estimates project RMB22.9 billion and RMB26.4 billion for 2024-2025.
• Rating and Target Price: Maintain HOLD rating, with target price adjusted to RMB85 (up 8.7% from current price). The company is fairly valued based on its P/E ratios.
• Additional Context: Factors include sluggish smartphone shipments and challenges in the consumer market. Monitor gross margin trends and inventory levels for potential upside, such as faster consumer recovery or new product sales.
  Note: This summary is based on CMB International Global Markets report.