Event: 1H23 achieved operating income of 179 million yuan (YoY+6.47%), net profit of 83 million yuan (YoY-0.55%) and non-return net profit of 54 million yuan (YoY-21.96%). From the split point of view, 2Q23 realized income of 90 million yuan (YoY+11.41%), net profit of 43 million yuan (YoY-4.82%) and non-return net profit of 25 million yuan (YoY-20.25%).

Financial dimension: gross profit margin decreased slightly, R & D investment increased. 2Q23's gross profit margin was 52.20%, down 4.70pct from a year earlier and 2.41pct from a month earlier. We expect to be mainly due to the pressure on the gross profit margin of smart small household appliances. At the same time, the end-inventory level of 2Q23 was 177 million yuan, an increase of 21 million over the end of 4Q22. 1H23 continued to increase R & D investment by 32 million, an increase of 11 million over the same period last year, accounting for 18.1% of revenue, an increase of 5.37pct.

Business dimension: deep ploughing the emerging application market, entering the field of high threshold. The application fields of the company's products are smart small appliances, white goods, cooling fans, power tools, sports travel, industry and automobiles, etc., while consolidating the existing application fields, the company continues to cultivate the emerging application market. In the field of automotive electronics, the company mainly focuses on the research and development of subdivided applications such as thermal management system, seat ventilation, electric windows, electric seats, car refrigerators and automobile air conditioners for new energy vehicles. In the first half of the year, the company passed the certification of ISO26262 functional safety management system, which has become an important milestone in the development of the company's regulation-level chips. In terms of market expansion, the verification cycle in the field of automotive electronics is long, and the company actively promotes chip products from small batch trial production to mass production in the field of automotive electronics with system-level technical support; in the field of industrial control, the company carries out research and development in application fields such as servo motors needed for industrial intelligent control. In the field of white electricity, the company continues to make technological breakthroughs in the field of white goods, reducing the cost and improving the reliability of white goods controllers.

Profit forecast and valuation suggestion: we forecast that the company's 2023E-2025E will be 463 million yuan, 554 million yuan and 694 million yuan respectively, an increase of 43.3%, 19.8% and 25.2% respectively over the same period last year. Using PE valuation method, taking into account 1) focus: the company mainly focuses on special chips for motor drive control; 2) racetrack: widely used downstream, from subdivisions such as motor drive control to enter the market, the company's chip products achieve the same or even better results in technical parameters, control performance and other aspects; 3) growth: the company's revenue and net profit have increased rapidly in recent years, and the next three years are expected to accelerate growth. 4) profitability: the company has strong independent pricing power and the independent IP kernel indirectly improves the company's gross profit margin. Therefore, we believe that the PE valuation level of the company should be higher than that of comparable companies, so we give the company PE (2023E) 57x-62x, corresponding to a reasonable price range of 105.45 yuan-114.70 yuan.

Risk hint: the risk that operating performance is difficult to sustain high-speed growth; downstream BLDC motor demand risk is lower than expected; motor control chip technology route risk; supplier concentration risk; customer concentration risk; R & D risk; intellectual property risk; core technology disclosure risk; price or gross margin fluctuation risk; inventory price drop risk.