Recently, Yunzhong Technology released its 2023 annual report on the official website of the Shanghai Stock Exchange and designated information disclosure media. According to the report, Yunzhong Technology achieved operating income of 524.8955 million yuan in 2023, an increase of 13.35% compared with the same period of the previous year. The main business generally shows a positive trend. Among them, the market share of CMI products performed well, contributing 170 million yuan in operating income, maintaining a significant growth compared to 2022, with an increase rate as high as 45.55%.

The operating conditions and analysis of Yunzhong Technology in 2023 are as follows:

According to CAICT data, from January to December 2023, the total shipment of mobile phones in the Chinese market reached 289 million units, representing a year-on-year growth of 6.5%. Among them, the shipment of 5G mobile phones was 240 million units, up 11.9% year-on-year, accounting for 82.8% of the total mobile phone shipments during the same period. From a trend perspective, domestic smartphone shipments have remained at a high level of over 25 million units per month since a significant increase in September 2023. In January 2024, the domestic market's mobile phone shipments reached 31.778 million units, representing a year-on-year growth of 68.1%. Among them, 5G mobile phones accounted for 26.165 million units, up 59.0% year-on-year, making up 82.3% of the total mobile phone shipments during the same period. The shipment volume of smart phones reached 29.513 million units, increasing by 61.4% year-on-year and accounting for 92.9% of the total mobile phone shipments during the same period. In 2023, the company achieved operating revenue of 524.8955 million yuan, an increase of 13.35% compared with the same period of the previous year. The company's main business generally showed a positive trend.

In 2023, relying on the mature processes and technologies in the field of consumer electronics, the company actively explored the automotive electronics market, focusing on chassis by-wire braking systems, steering systems, and electronic door and window systems. The main products in the field of by-wire chassis braking systems include ABS, ESC, ONE BOX, etc.

In 2023, the company's MLCC business entered the research and development and trial production stage. MLCC business is a medium and long-term strategic development area for the company. In the future, with the investment and construction of MLCC projects, the company will comprehensively improve the process and technology of MLCC-related products, achieve batch and large-scale production of MLCC-related products, and help promote the overall localization process of the industry.

During the reporting period, the company considered that the semiconductor lead frame business was still in the growth stage, and the product upgrade was not yet completed. In the future, to layout the mid-to-high-end market, it is necessary to continuously invest in research and development and resources to enhance product competitiveness. Moreover, in terms of industry tracks and customer resources, the synergy with the consumer electronics field the company is engaged in is relatively low. At the same time, in light of the company's operating conditions and the current development requirements such as improving cash flow and profit status, the company has further consolidated its strategic development requirements for the core business of consumer electronics and MLCC business. It has reduced its continuous investment in the semiconductor lead frame business and waived its priority right to increase capital in Chizhou Yunshan during the reporting period. It was then decided to give up the actual control of Chizhou Yunshan through an external capital increase in 2024.

During the reporting period, the company firmly advanced the technological upgrading and innovation of its products. We have intensified the introduction of talents and further expanded the R&D team. Explore the market through multiple channels and in all aspects, with a focus on the market layout of CMI series products, and consolidate the industry position.

1. Business operations

During the reporting period, the company achieved operating revenue of 524.8955 million yuan, an increase of 13.35% compared with the same period of the previous year. This was mainly due to the recovery of downstream industries such as consumer electronics and automotive electronics, as well as the rise in the prosperity and demand of the terminal market, which led to an increase in the company's operating revenue. During the reporting period, the company's MLCC (Multilayer Ceramic Capacitors) business was still in the research and development and trial production stage, which led to a significant increase in period expenses such as materials, labor, and depreciation. At the same time, due to the low product pricing, insufficient capacity utilization, and high proportion of fixed expenses in the early market expansion stage of Chizhou Yunshan, the gross profit margin was relatively low. The above factors led to the company's net profit attributable to shareholders of the listed company for the year 2023 being -126.1389 million yuan, a decrease of 85.18% compared with the same period of the previous year. The net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was -130,931,700 yuan, a decrease of 80.26% compared with the same period of the previous year. At the end of the reporting period, the company's total assets were 1,614,530,200 yuan, an increase of 21.93% compared to the beginning of the period. This was mainly due to the investment in the MLCC (Multilayer Ceramic Capacitor) project, which led to an increase in total assets.

2. R&d situation

In 2023, the company continued to increase its investment in development, its R&D capabilities were constantly enhanced, and it achieved fruitful innovation results. In 2023, the company's R&D investment was 106,429,400 yuan, an increase of 37.32% year-on-year.

As of December 31, 2023, the company has obtained a total of 265 currently valid patent authorizations, including 42 invention patents and 223 utility model patents, and has also obtained 12 software Copyrights. During the reporting period, the company added 58 patents, including 14 invention patents and 44 utility model patents.

As the company's demand for R&D technical talents expands rapidly, the gap in R&D technical talents is becoming increasingly prominent. To meet the long-term development needs, during the reporting period, in addition to maintaining a high proportion of R&D investment, the company also further expanded its R&D team, supplemented key R&D capabilities, and maintained its core competitiveness. During the reporting period, the company vigorously expanded its talent recruitment and gathered outstanding talents. By the end of the reporting period, the number of R&D personnel in the company increased by 12, representing a year-on-year growth of 7.06%. At the end of the reporting period, the proportion of R&D personnel to the total number of employees in the company was 16.88%.

3. Business development situation

During the reporting period, the company mainly focused on the development of three major fields: consumer electronics, automotive electronics and electronic ceramics. Relying on its leading R&D capabilities, reliable product quality and excellent customer service, the company, on the one hand, continuously consolidated its advantages in consumer electronics, and on the other hand, actively promoted the development of automotive electronics and electronic ceramics businesses, achieving positive results. During the reporting period, the company laid out the automotive-grade IGBT market, continuously enhancing the competitiveness of automotive electronic products, and at the same time achieved mass production of MLCC products.

4. Future Outlook

The company will continuously enhance its R&D and innovation capabilities, take market demand as the guide, provide comprehensive solutions for customers and increase the added value of products to enhance customer stickiness. The company will maintain its leading position in the field of mobile phone optics, continuously break through and innovate, and be committed to launching CMI iterative upgraded products on average every two years to consolidate its industry position.

Link to "Suzhou Yunzhong Electronic Technology Co., LTD. 2023 Annual Report：

https://static.sse.com.cn/disclosure/listedinfo/announcement/c/new/2024-04-24/688260_20240424_HSH7.pdf