Revenue in 2022 fell 1% year over year, and revenue increased month-on-month in the fourth quarter. The company's revenue in 2022 was 768 million yuan (YoY -0.78%), net profit of 146 million yuan (YoY -8.34%), after deducting net profit of 129 million yuan (YoY -9.23%). Among them, 4Q22's revenue was 152 million yuan (YoY -23.4%, QoQ +6.6%), net profit of the mother was 8.88 million yuan, and net profit of the non-return mother was 17.98 million yuan, mainly due to loss of 38.41 million yuan due to the impairment of calculated assets. In terms of profitability, gross margin increased by 5.6pct to 44.63% in 2022, of which 4Q22 gross margin was 42.06% (YoY -0.2pct, QoQ -1.5pct); annual R&D expenses increased 68.42% to 108 million yuan, R&D fees increased 5.8pct to 14.07%, management fees decreased 0.2pct to 3.70%, sales rate increased 0.3pct to 5.15%, and net interest rate decreased by 1.1pct to 19.78%.

Revenue from power conversion chips and intelligent networking delay management units grew in 2022. By product, the company's power conversion chip revenue in 2022 was 328 million yuan (YoY +4.36%), accounting for 43%, with a gross profit margin of 46.42% (+8.4pct), mainly due to the introduction of new products; power protection chip revenue was 266 million yuan (YoY -11.73%), accounting for 35%, gross profit margin of 44.19% (+5.3pct); intelligent networking delay management unit revenue was 72 million yuan (YoY +56.32%), accounting for 9%, gross margin of 38.02% (+6.1pct) Mainly due to the increase in the replacement rate of electronic detonators; signal chain chip revenue was 38 million yuan (YoY -19.18%), accounting for 5%, gross profit margin of 46.66% (-1.2pct); display driver chip revenue was 34 million yuan (YoY -26.97%), accounting for 4%, and gross profit margin of 42.42% (+0.5pct).

The short term benefits from the recovery in downstream demand, and I am optimistic that new products will blossom more in the long term. Shipments of consumer electronics terminals, such as mobile phones, fell in 2022, putting pressure on the company's performance. According to Counterpoint's latest research, it is estimated that overall mobile phone shipments in the Chinese market will return to more than 280 million units in 2023, with the high-end segment increasing by nearly 5% year-on-year, which is superior to the market average. As demand for mobile phones recovers, the company's performance is expected to return to growth. Furthermore, the company continues to expand the layout of DCDC and signal chain product lines. In 2022, a number of low-power DCDCs and high-voltage high-efficiency DCDCs were quickly launched, using the latest low-power low-noise simulation process and high-voltage high-reliability BCD process, which were recognized by major customers. At the same time, various signal chain products with performance indicators that reached international advanced levels were also launched, and the promotion of serialized products was accelerated, and sales gradually began to form.

Investment advice: The recovery in consumer electronics demand is compounded by the development of new products to maintain the “buy” rating. We expect the company to return net profit of 2.05/282/339 million yuan in 2023-2025, a year-on-year growth rate of +40.4/+37.7/ +20.0%; EPS is 2.29/3.15/3.78 yuan, and PE corresponding to the stock price on April 12, 2023 is 40/29/24x, respectively. The company has benefited from the recovery in consumer electronics demand and the expansion of new products to maintain its “buy” rating.

Risk warning: New product development falls short of expectations; customer verification falls short of expectations; demand falls short of expectations.