On the evening of April 22, Kangxi Communications released its 2023 annual report.
Net profit down 51.5%
Kangxi Communication achieved an operating income of 415 million yuan, almost the same as a year-on-year period. Thanks to the deep technical accumulation in the field of Wi-FiFEM, the company has developed a series of Wi-Fi7FEM products in 2023 through continuous and persistent technological breakthroughs, which fully demonstrates the company's technological leadership in the domestic wireless communication industry and enhances the company's market competitiveness.
net profit after deducting non-recurring gains and losses was 1.88 million yuan, down 81.37% year-on-year. The company's operating income shrank.
Kangxi Communication's investment income in 2023 will be 194,000 yuan, but it will be 4.1 million yuan in 2022. Non-operating income was 8.03 million yuan, a year-on-year decrease of about 2 million yuan. In 2023, the net profit will be 9.92 million yuan, a year-on-year decrease of 51.50%.
The main reasons for the decline in performance are:
1. In order to continue to maintain competitiveness and seize the good market opportunity of domestic substitution of chips, the company continued to increase R&D investment, which increased R&D expenses by 8.2823 million yuan compared with the previous year, a year-on-year increase of 15.15%.
2. Affected by exchange rate fluctuations, the company's foreign exchange income in 2023 decreased by 8.3343 million yuan compared with the previous year, a year-on-year decrease of 66.21%.
Figure: Kangxi Communications' 2023 annual report
Kangxi Communications was successfully listed on the Science and Technology Innovation Board of the Shanghai Stock Exchange on November 17, 2023. Overall, the semiconductor industry is in a downward trend in 2023, and it is not easy for Kangxi Communication to ensure the scale of revenue and stabilize market share. The company's overall financial position is unsatisfactory.
Gross margin was 28.1%, a slight increase
Kangxi communication products include Wi-Fi FEM and IoT FEM, which integrate the company's self-developed RF front-end chips such as PA, LNA and RF switches.
In the field of the Internet of Things, smart terminal devices generally use two or more communication methods such as Wi-Fi, Bluetooth, and ZigBee to improve the convenience and compatibility of device networking.
Figure: Kangxi Communications' 2023 annual report
In 2023, the main business income of Kangxi Communication will be basically flat compared with the previous year, with a slight decline.
From the perspective of product category sales, the sales revenue of Wi-Fi FEM products was basically the same as that of the previous year, and the sales revenue of IoT FEM products increased compared with the previous year, mainly due to the continuous expansion of new products and the realization of batch sales of Kangxi Communication. From the perspective of business regional distribution, the sales in domestic and overseas regions changed slightly compared with the previous year, of which 66.28% were domestic and 33.72% were overseas.
In 2023, the gross profit margin of Kangxi Communication will be 28.10%, an increase of 1.47% year-on-year, and the net profit margin will be 2.39%, a decrease of 2.48% from the same period last year. Although the gross profit margin of Kangxi Communication has increased year-on-year, and the profitability of the company's main business has improved, the net profit margin has declined year-on-year due to excessive R&D investment, squeezing the net profit margin.
R&D expenses increased by 15.15% year-on-year
In 2023, Kangxi Communications will invest 62.95 million yuan in R&D, and its R&D expenses will increase by 15.15% year-on-year.
Figure: Kangxi Communications' 2023 annual report
As a high-tech enterprise, Kangxi Communication has always emphasized scientific and technological research and development, attaches importance to technological independence, focuses on cultivating a R&D team with broad vision and excellent technology, and gradually condenses the core competitiveness of technology through projects. As of December 31, 2023, the company has a total of 81 R&D personnel, accounting for 47.93% of the company's total number, and 34 R&D personnel with a master's degree or above, accounting for 41.98% of the R&D personnel. The company has established a relatively complete R&D echelon.
As of December 31, 2023, the company has obtained 28 patents (including 16 invention patents), 44 other intellectual property rights such as the exclusive right to layout design of integrated circuits, and has formed an independent patent and technical system in the field of RF front-end chips.
With the rapid development of wireless communication technology and the release of the Wi-Fi 7 protocol in 2024, the RF front-end chip market has shown a new development trend, and the RF front-end chip has fallen into a fierce competition pattern. The world's major manufacturers are competing fiercely in technological innovation, market share, and industrial chain control. In the global sector, Skyworks, Qorvo and others continue to dominate due to their strong technology accumulation and market position. At the same time, other domestic manufacturers are also trying to occupy the market by increasing R&D investment, price competition and diversified services, trying to improve the influence of the domestic market.