On the evening of April 24, Huaqin Technology (603296. SH) released its 2023 annual report, which shows that in 2023, the company will achieve operating income of 85.338 billion yuan, net profit attributable to shareholders of listed companies of 2.707 billion yuan, a year-on-year increase of 5.59%, non-net profit attributable to shareholders of listed companies of 2.163 billion yuan, a year-on-year increase of 15.77%, gross profit margin of main business of 10.80%, an increase of 1.22 percentage points over the previous year, and basic earnings per share of 3.97 yuan/share, a year-on-year increase of 0.91%; The net cash flow from operating activities reached 3.850 billion yuan, a year-on-year increase of 49.96%. Maintaining steady operation throughout the year has laid a good foundation for the company's high-quality development in 2024.
2023 is a very important year in the history of Huaqin Technology's development, after more than ten years of continuous cultivation in the intelligent hardware ODM industry, the company successfully achieved the issuance and listing on the main board of the Shanghai Stock Exchange, thus starting a new journey in the capital market.
Technology and product innovation capabilities effectively support the continuous optimization of the diversified product line structure
In 2023, the company will buck the trend in the industry, with excellent performance, and both net profit and non-net profit will grow, demonstrating the company's business resilience in the industry for many years to fight against the industry cycle, which is inseparable from the diversified business layout of "2+N+3". The company's products span consumer electronics products, industrial data products, automotive electronics and other fields, and have formed a significant ecological effect in the two ecosystems represented by smartphones and laptops. The company is one of the few companies in the industry that has the ability to realize the R&D design and X86 architecture design and R&D based on ARM architecture at the same time, and has made breakthroughs and formed scale effects in smart phones, laptops, data center products, and automotive electronic intelligent hardware.
As the world's leading intelligent hardware platform enterprise, Huaqin Technology has always maintained respect for technology, accumulated rich technical experience in product development, design and production, and provided solid technical support for the research and development of diversified intelligent hardware products. The company has a professional R&D team and a high level of R&D investment, and the company has set up five R&D centers in the country according to product types and application scenarios, with more than 10,000 team members to meet the needs of new technology and new product development in multiple fields. In 2023, the R&D investment will be 4.548 billion yuan, accounting for 5.33% of operating income, and by the end of 2023, the company has 11,253 R&D personnel, accounting for 32.2% of the total number of employees, fully demonstrating the company's strong strength in technology research and development.
In 2023, Huaqin Technology will further consolidate its position as a global leader in the smartphone ODM field. According to Counterpoint data, Huaqin Technology, Longcheer Technology and Wingtech Technology account for more than three-quarters of the total IDH/ODM shipments of smartphones in 2023, and still dominate the global market pattern. Among them, Huaqin successfully won the top spot in 2023 with a share of 27.9%. Counterpoint estimates that IDH/ODM shipments will grow by 4% annually through 2024, and global ODM penetration is expected to continue to increase.
At the same time, the PC market is showing a structural development trend, and the traditional laptop market is recovering slowly, while AI PCs and high-performance laptops equipped with AI-related functions and services have become a strong driving force for the growth of the industry. Canalys predicts that global shipments of AI PCs will reach 48 million units in 2024. Huaqin Technology has seized the opportunity of the AI market, applied advanced technologies in the field of mobile phones and other products to PC products, continuously improved R&D efficiency to a leading position in the industry, and established good cooperative relations with well-known brand customers at home and abroad, and its market share has been expanding, and it has entered the top four in the world. In the future, with the continuous maturity of the AI PC software and hardware ecology and the increasing penetration rate of AI PC, the company will continue to enhance the value of products and services brought by the comprehensive capabilities of hardware and software, thereby bringing continuous growth in performance.
While conforming to the development trend of AI and consolidating the advantages of traditional consumer electronics business, Huaqin Technology has made many bright spots in data products, automotive electronics and other business segments.
Since 2017, the company has been laying out the data center field, expanding its product field horizontally, and continuing to consolidate the sustainability of steady business growth. Since 2022, the company's data business has continued to grow rapidly, and in 2023, it will achieve a three-fold increase in revenue, and the AI server will be launched for the first time. At the same time, it is also one of the few domestic manufacturers that can provide a full-stack product portfolio from general-purpose servers, heterogeneous artificial intelligence servers, switch data communication products to storage servers, etc., and has established close cooperative relations with many well-known domestic cloud vendors.
In the automotive electronics sector, the company has a multi-product portfolio, and has achieved breakthroughs in the four major product areas of intelligent cockpit, intelligent vehicle control, intelligent networking, and intelligent driving. In the intelligent cockpit sector, in terms of vehicle-grade intelligent hardware products, the company has laid out mainstream cockpit platforms and intelligent connected products, with products covering multiple platforms, and can be customized for development, operation and manufacturing according to needs, breaking through mainstream customers and expanding and deepening the cooperative relationship with customers. In terms of intelligent driving products, product research and development has entered a milestone stage, and will be gradually introduced to mainstream OEMs in the future. In 2023, the company's automotive and industrial products have achieved revenue of 817 million yuan, an increase of 37.57% year-on-year, and gross profit increased by 7.11 percentage points. In the future, the company's automotive electronics business will continue to expand customers in Japan, Europe and the United States, which will become the main growth point of the company's automotive electronics business.
A number of measures such as buybacks and dividends have boosted market confidence and continued to focus on investor returns
It is worth noting that Huaqin Technology insists on repaying the continuous support of shareholders through share repurchases, cash dividends and other means, and actively fulfills its obligations as a listed company. On the other hand, the annual report shows that the company intends to distribute profits in 2023 based on the total share capital registered on the record date of the implementation of equity distribution (deducting the number of shares in the company's repurchase account) and convert capital reserve into share capital, with a cash dividend of 869 million yuan (tax included) for every 10 shares, and a cash dividend of 12 yuan per 10 shares, and 4 shares of share capital will be converted from capital reserve, and the proportion of cash dividends to net profit attributable to shareholders of listed companies will be 32.11%, so that investors and enterprises can share the fruits of growth.
In February this year, Huaqin Technology announced that the first grant registration of the company's 2023 restricted stock incentive plan has been completed, and the incentive will be granted to 134 people at 40.32 yuan per share, and all the incentive objects are the company's middle and senior managers and core backbone personnel. The equity incentive is conducive to fully mobilizing the enthusiasm of the company's employees and enhancing investors' confidence in the company's investment.
Adhering to the corporate mission of "improving people's communication and life", Huaqin Technology continues to promote the "2+N+3" product layout of various categories, continuously improves the level of R&D technology, enhances supply chain integration capabilities, and strengthens the company's organization and talent team building, and has won the 16th place in the 2022 Top 100 Electronic Information Rankings, the 213th place in the 2023 Fortune China 500, and the 98th place in the 2023 China Top 500 Private Enterprises. In the future, the company will look for sustainable development opportunities in the ever-changing market environment, maintain inexhaustible momentum in the turbulent market competition, and then enhance the value of its capital market and give back to investors with excellent market performance.
