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Recently, Guoke Micro, a leading domestic chip company, officially announced its 2023 mid-year performance report.
The report shows that the company achieved revenue of 2.541 billion yuan during the period, a year-on-year increase of 52.39%; net profit attributable to the parent company was 90.5433 million yuan, a year-on-year increase of 319.79%; non-net profit after deduction was 53.7879 million yuan, a year-on-year increase of 294.09%.
Both revenue and net profit increased significantly, setting a new high for the same period since the company was founded. But what is interesting is that the capital market did not show strong feedback on this. On August 30, the second day after the announcement, Goke Micro’s share price finally closed up 1.68% after a brief rise. In the following days, There have been no obvious ups and downs, and as of now, the company's stock price is still at a low level.
Since the performance is impressive, why is the capital market reaction so cold? Behind the double increase in revenue and net profit, what is the quality of Guoke Micro's performance? What room for imagination does the company have in the future? With these questions, the data ape tried to take a look at the financial report and get a glimpse of it.
Encoding, decoding and storage, the three major businesses are running wildly
At first glance at Guokewei's 2023 interim report, the results are indeed remarkable, and the main business has blossomed in many aspects.
According to the financial report, Guokewei’s main business mainly consists of four sectors: video decoding, video encoding, solid-state storage and Internet of Things.
With the rise of digital multimedia industries such as new media and VR/AR, as well as the development of emerging artificial intelligence technologies such as smart medical care and driverless driving, video is gradually becoming an important source of information acquisition in the intelligent era. However, high-quality video transmission requires A large amount of storage space and bandwidth, in order to solve this problem, video encoding and decoding technology came into being.
Simply put, the main function of video encoding and decoding technology is to use a series of complex algorithms to analyze and compress redundant information in the video, while ensuring the video quality, so as to reduce the size of the video file as much as possible. , reduce storage and transmission costs.
Among them, video encoding is to convert the original format file into another format through compression technology, and decoding is the reverse process of encoding, which restores the compressed video file to the original video. This process usually requires a specific decoder to achieve .
In the field of video decoding, Goke Micro has currently launched a number of high-performance video decoding chips with independent intellectual property rights, including GK62 series, GK63 series, GK65 series, GK67 series and GK68 series, which respectively correspond to high-definition set-top box chips, ultra-high definition 4K set-top box chips, ultra-high-definition 8K set-top box chips, TV/commercial display chips and AR/VR processing chips.
During the reporting period, the company's 8K ultra-high-definition decoding chips were shipped in batches on the market; the launched GK67 series chips have been introduced and shipped to mainstream TV/commercial display terminal manufacturers; the launched GK68 series has been introduced to some customers.
Thanks to this, the business achieved strong growth during the reporting period. According to the financial report, the company's video decoding series chip products achieved sales revenue of 1,590,585,500 yuan, a year-on-year increase of 49.13%, accounting for 62.60% of the company's operating revenue in the first half of the year.
Monetization in the video encoding business is also impressive, with revenue increasing exponentially. According to the interim report, Goke Micro's video encoding series chip products achieved sales revenue of 715.6616 million yuan in the first half of the year, a year-on-year increase of 120.22%, and the revenue accounted for 28.17%.
In the field of solid-state storage, the solid-state hard drive controller chip developed by Goke Micro is mainly used in solid-state storage hard drives, including desktop hard drives, notebook hard drives, etc. During the reporting period, solid-state storage chips and products achieved sales revenue of 136.8932 million yuan, a year-on-year increase of 3.75%, accounting for 5.39% of the company's operating revenue in the first half of the year.
Finally, there is the field of Internet of Things. Up to now, the company's IoT series chips mainly include GK95 series and GK97 series. The GK95 series products have the characteristics of high integration, low power consumption, high sensitivity, etc., and are mainly used in the field of navigation and positioning; the GK97 series is mainly for high-precision positioning and navigation, The high-precision timing market is used in transportation, public security, disaster relief and reduction, agriculture, forestry, animal husbandry and fishery, urban governance and other industries.
During the reporting period, Guoke Micro's IoT series chip products achieved sales revenue of 87.0661 million yuan, a year-on-year decrease of 31.53%, accounting for 3.43% of the company's operating revenue in the first half of the year.
Gross profit margin fell, nearly 40% of net profit came from government subsidies
The main business is booming, which undoubtedly provides support for the company's revenue growth. However, after further dissecting the data, Data Monkey discovered that behind the company's seemingly good performance, there are also several risk points that cannot be ignored.
First, the company's gross profit margin is declining. The financial report shows that in the first half of 2023, Guoke Micro's gross profit margin was 10.11%, a year-on-year decrease of 6.06 percentage points, and far lower than the industry average of 30%.
Considering that during the reporting period, the company reduced sales expenses and administrative expenses in order to increase profits through "cost reduction and efficiency improvement", rising costs may be one of the main reasons for the decline in gross profit margin. During the reporting period, the company's operating costs were 2.284 billion yuan, a year-on-year increase of 63.42%, which was higher than the growth rate of operating income of 52.39%.
Image source: Guoke WeChat official account
Image source: Guoke Micro Financial Report
At the same time, high government subsidies also hide Goke Micro’s true profits to a certain extent.
According to financial report data, in the first half of 2023, the company's net profit attributable to the parent company was 90.5433 million yuan, and non-recurring gains and losses were 36.7554 million yuan. Among them, the most important part is "government subsidies", which is as high as 33.6938 million yuan. In other words, industrial subsidies from the government have accounted for 37.21% of the net profit for the first half of the year.
Image source: Guoke Micro Financial Report
Since its listing, Goke Microin chip research and development and industrialization have received support from many special funds. However, a key problem is that government subsidies are not sustainable. Once the preferential policies change, it will inevitably affect the stability of the company's profits.
Obviously, Guokewei is also aware of this problem. It mentioned in the risk warning: the government subsidies included in the company's current profits and losses exceed 30% of the absolute value of the current total profits, and some of the above-mentioned government subsidies are not sustainable. In the long term, if the company no longer meets the subsidy conditions of relevant preferential policies in the future or the amount of government subsidies changes significantly, the company will face the risk of reduced government subsidies that will affect profits and losses.
The industry has huge prospects, and how much imagination does Guokewei have?
In recent years, due to the lack of core resources, calls for domestic substitution have become increasingly louder. With the strong support of national policies, domestic track manufacturers have shown explosive growth. The self-sufficiency rate of domestic semiconductor chips has surged from less than 5% initially to 20% to 30%. It is expected that by 2025, the self-sufficiency rate of domestic chips will reach 70%, which will greatly promote the development of my country's semiconductor industry.
Although the integrated circuit design field where Guoke Micro is located started relatively late, relying on many advantages such as strong support from national policies and huge market demand, my country's integrated circuit design industry has become the main driver of market growth in the global integrated circuit design industry. force. Data shows that the market size of my country's integrated circuit design industry will reach 451.9 billion yuan in 2021, and it is expected that its market size will reach 696.97 billion yuan in 2023.
Judging from the general trend, the industry prospects are promising. On the road of domestic substitution, Guoke Micro seems to have a lot of room to play. However, specifically looking at the major segments the company is currently in, what will be Guoke Micro's performance and future development potential? Data Monkey will expand in detail on the three main businesses that are growing rapidly from the company's financial report.
The first is the field of video decoding, which is the main source of Guoke Micro’s revenue. At present, the company's video decoding chips are mainly used in live broadcast satellite set-top boxes, cable set-top boxes, IPTV/OTT set-top boxes and TV/commercial display fields. Among them, in the field of cable set-top boxes, the company has currently introduced more than 80% of provincial network companies, and its products are highly competitive.
According to the financial report, in the field of IPTV, the company's products have successfully won bids from operators such as China Telecom and China Mobile. The software versioning of companies in various provinces has basically been completed. All provinces can start large-scale shipments, and the market share is expected to gradually increase.
Looking at the video encoding business, this is also the fastest growing business of Guoke Micro in the first half of the year. The company's video encoding chips are mainly used in the field of smart security. At present, the global security industry has entered the digital era from the analog era. The output of video back-end processing chips NVR/DVR SoC chips continues to increase, and the penetration rate is also increasing.
CCID Consulting data shows that global NVR/DVR SoC chip shipments reached 156.42 million units in 2020, of which China's NVR/DVR SoC chip shipments reached 118.08 million units. According to CCID Consulting's forecast, the global NVR/DVR SoC chip market size will reach US$1.446 billion by 2026, and the market size of China's NVR/DVR SoC chips will reach US$1.079 billion.
In order to meet market demand, Goke Micro continues to invest in core technologies such as ISP, codec, and NPU. During the reporting period, the company's blockbuster new product GK7205V500 encoding chip has completed sample verification and customer side introduction, and has entered the batch promotion stage. The financial report pointed out that this product is expected to significantly increase the company's market share in the field of coding chips.
Finally, there is the solid-state storage business. From the perspective of the external environment, the vigorous development of emerging technologies such as 5G, AI, Internet of Things, and smart driving vehicles will undoubtedly accelerate the explosive growth of data generation and storage demand. In addition, with the national 14th Five-Year Plan and a series of other With the implementation of the digital development strategy, the rigid demand for commercial passwords will gradually and continuously be released.
From the perspective of corporate products, the financial report pointed out that Guoke Micro's new generation-M series disks and its self-developed main control chip have respectively obtained commercial secret certificates issued by the State Cryptozoology Administration, and the 610C-M encryption solid-state The hard drive and 610E-M encrypted solid state drive have obtained the National Secret Certificate. Data Yuan believes that if the -M series of products can be produced normally, the solid-state memory chip business is expected to push the company into a new round of growth.
To sum up, no matter from the perspective of industry prospects or the company's own business development level, Guoke Micro seems to have great advantages, laying a certain foundation for subsequent performance growth. However, it is worth noting that the company seems to be somewhat stagnant in expanding new business, with no new progress. If there is no new business entry, Guokewei’s imagination space will not be able to open up in the future.
However, Data Yuan noticed that in this report, the company mentioned a new field for the first time - "operator cloud computer". How will Guoke Micro make efforts in this new field in the future, and whether it can contribute to the company? Let us wait and see for new performance growth.
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Text: Kudingcha / Data Yuan
