Core viewpoints

1: the company has continued the recovery since 2022Q4, and its operating income and gross profit margin have continued to rise. The company has recently issued a share buyback plan based on confidence in future sustainable development and reasonable judgment of the company's value to enhance long-term development confidence.

2: the company's product category continues to expand, AC-DC and LED lighting continue to enrich the application scene, new categories of motor drive control chips, DC-DC products and multi-string BMS industrialization are progressing smoothly. The company will further expand the research and development of signal chain chips and is expected to form an one-stop chip solution with power management chips.

Event

According to the company's semi-annual report for 2023, 2023H1 achieved operating income of 302 million yuan, down 3.85% from the same period last year; net profit from home was 1.3205 million yuan, down 97.46% from the same period last year; and gross profit margin was 23.88%, down 11.44pct from the same period last year. 2023Q2 achieved an operating income of 169 million yuan, an increase of 16.14 percent over the same period last year, an increase of 27.95 percent over the previous year; a net profit of 3.6323 million yuan, turning losses into profits; and a gross profit margin of 25.00 percent, an increase of 2.56pct.

Brief comment

1. Business performance continues to recover, and share buybacks enhance confidence in long-term development.

The company has continued the revenue growth trend since 2022Q4. On the basis of the month-on-month growth of 2023Q1 business income, 2023Q2 business income has achieved about 28% month-on-month growth.

In addition, thanks to the company's active exploration of new areas and the continuous launch of new products, the company's comprehensive gross profit margin has continued to rise month-on-month since 2022Q4, and 2023Q2 has rebounded to 25.0%, an increase in 2.56pct compared with 2023Q1. At the same time of the performance repair, the company issued a share buyback announcement on August 20, intending to buy back the company's shares in the form of centralized bidding transaction, with a total capital of no less than 42 million yuan and no more than 84 million yuan, and the repurchase price shall not exceed 78 yuan per share. Based on the confidence in the future sustainable development of the company and the reasonable judgment of the company's value, the repurchased shares will be used in the employee stock ownership plan or equity incentive at an appropriate time in the future, which will help to improve the company's long-term incentive mechanism. fully mobilize the enthusiasm of the company's employees and promote the stable, healthy and sustainable development of the company.

2. The company focuses on long-term development, insists on R & D investment and promotes industrial integration.

The company continues to maintain high-intensity R & D investment to ensure the promotion of new product R & D projects to the maximum extent. 2023H1 invested 69.1309 million yuan in R & D expenditure, an increase of 56.65% over the same period last year, accounting for 22.92% of the operating income. At the same time, the company continues to introduce excellent R & D personnel and continue to expand the R & D team, thus enhancing the company's competitive strength. By the end of June 2023, the company had a total of 244 R & D personnel, an increase of 49 over the same period last year. The number of R & D personnel exceeds 73% of the company's total staff. In June 2023, based on the purpose of industrial integration and coordinated development, the company completed the holding of moving Core Micro Chengdu and opened a new strategy and layout of motor drive control and magnetic sensor business. The main products and R & D layout of dynamic Micro Chengdu are motor drive and magnetic sensor chips in the fields of household appliances, industry and security, automobile and new energy, server and computing power, etc. Its smooth integration with the company can greatly enhance the depth and width of the layout of the company's motor drive product line, accelerate the introduction and industrialization of new products in the server, industrial and automotive fields, and enhance market competitiveness.

3. The company's products are continuously updated iteratively, optimize the product structure and enrich the application field.

The company's products have covered AC-DC, DC-DC, driver IC, linear power supply, battery management and other high-performance analog and digital hybrid chips, focusing on providing one-stop chip solutions for electrical lighting, household appliances, security monitoring, network communications, personal electronics, power conversion and energy storage and other customer groups.

(1) in terms of AC-DC, the company actively promotes the localization of high-power fast charging (up to 240W) and high-power power (up to 3000W) applications. Taking AC-DC as the starting point, the company continues to import chips such as DC-DC, linear power supply and gate driver to form the overall solution, and continues to expand in many application fields, such as fast charging, household appliances, building automation, etc., among them, the company's sales in the field of household appliances have increased by more than 40% year on year. (2) in the aspect of LED driver, the high-performance domestic scheme of "PFC+LLC/LED driver" has successfully entered the customer supply chain of many high-power LED lighting industry, and the maximum mass production power can reach 1000W. High-precision deep dimming QR Buck LED backlight driver chip, by providing one-stop chip solution, successfully mass-produced in intelligent TV, intelligent conference system, indoor multimedia advertising system and other applications. (3) DC-DC, the company's 4.5V-40V voltage range, 0.6A-6A current range DC-DC chips are widely used in electrical lighting, household appliances, network communications, security monitoring and other fields, has been recognized by the head customer of a number of benchmarking projects, is in a steady and rapid volume stage. At the same time, the company is actively carrying out the research and development of products with high current above 8A and high voltage above 60V, among which 100V high voltage CMCOT architecture DC-DC products have been in the sample delivery stage, mainly used in garden tools, new energy and energy storage, new energy vehicles and other fields. (4) in terms of battery management chips, the company introduces high-side / low-edge drive BMS AFE chips that can support 110V internal battery management system applications, built-in high-precision voltage detection ADC and current detection ADC, integrated battery balancing, mainly used in wearable electronic products, power tools, drones, power battery packs, indoor / outdoor energy storage and other fields. For 200V-800V high-voltage applications, the company is also actively developing and supporting daisy chain cascaded BMS AFE chips, while promoting the certification of ISO26262 functional safety standards, targeting large energy storage systems and new energy vehicles.

4. The business layout extends to the field of signal chain, and the collaborative power management chip provides an one-stop chip solution.

While continuously enriching the product type and quantity in the field of power management, the company expands its business layout to the field of signal chain. In the early stage, the company has set up an independent signal chain research and development team, and now it has expanded the research and development of signal chain chips such as amplifiers, converters and sensors. Among them, the main products of amplifiers are high voltage amplifier, high precision amplifier, low power amplifier, isolated amplifier and so on, which are used in industrial automation, instrumentation, digital power supply, photovoltaic, automotive and wearable electronic products. The converter is mainly designed with high precision, low power consumption, multi-channel and other digital-to-analog converters, for industrial automation, communication equipment, medical equipment, power grid, instruments and equipment and other fields. Sensor products mainly layout temperature sensors, magnetic sensors, current sensors and so on, which are widely used in industrial automation, service robots, data centers, photovoltaic, automotive, wearable electronic products and so on. The signal chain chip is expected to form an one-stop chip solution with the power management chip to meet customer needs.

5. Profit forecast and investment suggestions:

As a leader in power management chips, AC-DC and LED lighting are constantly enriching application scenarios. The industrialization of new categories of motor drive control chips, DC-DC products and multiple strings of BMS is progressing smoothly, which is expected to become a new performance growth point. We predict that the company's income from 2023 to 2025 will be 724 million yuan, 995 million yuan and 1.305 billion yuan respectively, and its net profit will be 47 million yuan, 104 million yuan and 198 million yuan respectively. The current stock price will be 65 times, 29 times and 15 times PE respectively, maintaining the "buy" rating.

6. Risk tips:

Market demand falls short of expectations, with the escalation of current international trade frictions and macroeconomic changes, the development of downstream areas is facing a complex and grim situation, and there are certain uncertain factors leading to market demand falling short of expectations; the risk of falling prices and gross profit margins as a result of intensified market competition The risk that the profit forecast hypothesis is not valid, the profit forecast makes the assumption to forecast the sales quantity of the company's products based on the demand in the downstream application field of the company, and there is the possibility that the actual demand quantity is less than the expected quantity, which leads to the decline of the company's revenue. According to the sensitivity calculation, if the product sales volume decreases by 10.0%, the company's corresponding income decreases by 9.98%, and the return net profit decreases by about 9.98%.