Less than a year after being listed, BIWIN Storage has repeatedly handed over "face-changing" performance reports. Following the net profit of the first annual report after the listing last year fell by nearly 40%, since the beginning of this year, the quarterly report, semi-annual report and third quarterly report submitted by BIWIN Storage have suffered losses. Judging from the third quarterly report, the net profit attributable to the parent company and the non-net profit attributable to the parent in the first three quarters both lost nearly 500 million yuan. From the perspective of a single quarter, from the first to the third quarter of this year, both the overall net profit and the non-net profit turned into a loss. It is worth noting that due to the continuous losses since the beginning of this year, BIWIN's share price has also suffered a sharp fall, that is, since June this year, the overall decline has exceeded 40%.
Since the beginning of this year, there have been more than losses
The cumulative net loss in the first three quarters was nearly 500 million yuan
Recently, BIWIN Storage submitted its first three-quarter report since its listing, showing that profits continued to "change face" and "ended" with losses.
BIWIN's "Third Quarter Report of 2023" shows that in the third quarter and the first three quarters of this year, revenue of 974 million yuan and 2.122 billion yuan were recorded respectively, an increase of 21.61% and a decrease of 2.88% year-on-year respectively; In the same period, the net profit attributable to the parent company recorded -188 million yuan and -484 million yuan respectively, down 807.25% and 736.50% year-on-year respectively; In the same period, the non-net profit attributable to the parent company recorded -186 million yuan and -487 million yuan respectively, down 697.00% and 739.28% year-on-year respectively. It can be seen that from the third quarter and the first three quarters, net profit and non-net profit have turned from profit to loss year-on-year.
From the perspective of a single quarter, BIWIN Storage submitted a loss report card regardless of the overall net profit or non-net profit. According to public data, in the first quarter, second quarter and third quarter of this year, BIWIN Storage recorded net profit attributable to the parent company of -126 million yuan, -170 million yuan and -188 million yuan respectively; In the same period, the non-net profit attributable to the parent company was recorded as -129 million yuan, -173 million yuan and -186 million yuan respectively. It can be seen that since the beginning of this year, BIWIN Storage has shown losses in a single quarter, and the losses from the first quarter to the third quarter have further expanded quarter by quarter.
For the loss report card of the first three quarterly reports, BIWIN Storage gave four explanations: first, due to the low prosperity of the storage industry, the company's gross profit margin in the third quarter fell by 16.31 percentage points compared with the same period last year; Second, in August 2023, the company announced and granted restricted shares to employees, and the new shares paid about 47.5744 million yuan in the third quarter; In the third and third quarters, the company continued to increase R&D investment in chip design, firmware design, new product development and advanced packaging and testing, and vigorously introduced outstanding talents in the industry, resulting in a year-on-year increase of 41.6808 million yuan in R&D expenses, an increase of 125.83%; Fourth, in the third quarter, the price decline of the storage industry slowed down, and the industry gradually bottomed out, and the company made a provision of 12.508 million yuan for inventory price decline.
It is worth noting that in terms of operating cash flow, BIWIN Storage has continued to record a net outflow of operating cash flow since the beginning of this year, that is, in the first three quarters of this year, BIWIN Storage's net operating cash flow was -1.829 billion yuan. Among them, the first quarter and half year recorded -646 million yuan and -1.186 billion yuan respectively. In this regard, BIWIN Storage said that the large decline in net cash flow from operating activities was mainly due to the increase in cash for the purchase of goods and the payment of labor services due to the company's strategic stocking.
It should be noted that the loss from the first quarter to the third quarter of this year is not the first "face" of BIWIN's net profit. Since landing on the Science and Technology Innovation Board at the end of last year, in 2022, BIWIN Storage has submitted a report card with a year-on-year decline of nearly 40% in net profit, and submitted a "change of face" and "debut" in performance.
Behind this, it is closely related to the sluggish market demand and the sharp decline in sales prices. BIWIN Storage mentioned in this year's semi-annual report that from 2022 to the first half of 2023, due to macroeconomic fluctuations and other factors, downstream demand for mobile phones, tablets, and PCs will decline. If the demand of the downstream industry to which the company's products belong continues to decline in the future, and the company fails to seize market share and continue to expand the downstream industry through technology research and development, product competitiveness in a timely manner, it will lead to unfavorable situations such as a decline in the company's product prices and sales volume, and there is a risk of decline in future operating performance.
According to public information, BIWIN Storage was listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange on December 30, 2022. Judging from this year's semi-annual report, BIWIN Storage is mainly engaged in the R&D, design, packaging and testing, production and sales of semiconductor memory, which are mainly used in consumer electronics industries such as mobile phones, tablets, smart wearables, PCs, and industrial fields such as communication base stations, vehicle electronics, and anti-monitoring.
The stock price has fallen by 40% in the past five months
Investors are questioning profitability
As the performance continued to "change face", the net profit turned from profit to loss, and the share price of BIWIN Storage also fell. According to Flush (300033) data, since June 1 this year, in the past five months, BIWIN's share price has fallen by more than 40% as a whole.
For this reason, investors have also questioned the profitability of BIWIN Storage.
Among them, in response to the above-mentioned R&D investment, some investors asked BIWIN Storage, "Is there any research and development of new products or new projects now?" If so, does it include new technology? If not, does the company have any new measures against the decline in stock prices? ”
BIWIN Storage said that the company has set up a high-quality, experienced and professional high-level technology research and development team, and on the technical side, it is currently actively laying out chip IC design, advanced packaging and testing, storage testing equipment and algorithm development and other technical fields; On the product side, it mainly invests in the research and development of industrial vehicle specifications, enterprise-level products, and high-end consumer electronics, continuously enhancing the company's core competitiveness and extending the company's value chain.
Another investor asked, "Combined with your 2022 annual report and first quarterly report, how do you plan to increase profitability?" ”
BIWIN Storage said that the company plans to improve profitability through the following measures: in terms of the market, actively explore first-line customers, dig deep into market segmentation, and expand market share; In terms of technology, we will deepen the integrated layout of R&D, packaging and testing, enhance technical competitiveness, and increase the added value of products; In terms of operation, through lean management, we can reduce costs and improve operational efficiency. In the short term, the company's profitability is facing the dual pressure of industry downturn and increased R&D investment.
Externally, there is downward pressure on the industry, and internally, there is an increase in R&D investment, which brings about rising costs, further squeezing profits and expanding overall losses. So, when will BIWIN Storage survive this industry cycle and turn losses into profits? Or it is the focus of investors at the moment.
From the perspective of terminal applications, according to Canalys's official official account, in the third quarter of 2023, the global smartphone market fell by 1%, and shipments reached 293.4 million units due to the improvement of manufacturers' inventory situation in the second quarter and the launch of new products in the third quarter. Among them, in the third quarter of 2023, shipments in China's smartphone market fell flat for two consecutive quarters, down 5% year-on-year to 66.7 million units. Canalys expects the global smartphone market to grow moderately in a cautious manner in 2024. Manufacturers are expected to end 2023 with relatively healthy inventory levels and plenty of room to rebuild inventories for a potential demand recovery.
In the future, can BIWIN Storage increase the selling price and further improve the gross profit margin through the leading technology? After all, from the perspective of 2022, the gross profit margin of BIWIN's three major subdivisions of storage will all reach 20%, of which the gross profit margin of embedded storage, which accounts for the largest proportion of revenue, is only 17.10%, and the gross profit margin of consumer-grade storage, which accounts for the second largest proportion of revenue, is as low as 1.77%. From 2019 to the half year of 2022, BIWIN's gross profit margin is much lower than the average of comparable companies in the same industry.
Some brokerages pointed out that the development of integrated circuits in the mainland is relatively late overseas, and the current localization rate of memory chips is low, mainly relying on overseas imports; OVERSEAS MANUFACTURER SK HYNIX TECHNOLOGY LEADS THE NAND FLASH MARKET, AND SAMSUNG'S DRAM TECHNOLOGY LEADS THE GLOBAL MEMORY CHIP MARKET. Domestic enterprises have started a large-scale layout of memory chips, and the domestic memory chip market is facing a reshuffle.
As the process of domestic substitution of memory is expected to accelerate, can companies including BIWIN Storage seize this opportunity, and can they rely on leading technology to achieve breakthroughs in volume and price, and then turn losses into profits? It's worth paying attention to.
(Image source: Juchao Information Network, Shanghai Stock Exchange, Straight Flush)
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