Introduction to this report:

Revenue increased year over year in 2023, and net profit to mother turned a loss into a profit. High-end flagship products are pioneering the second growth curve of consumer electronics, and the smart security product matrix continues to expand.

Key points of investment:

Maintain the “Overweight” rating and maintain the target price at 68.20 yuan. Considering the company's growth in the field of mobile phones and smart security, the EPS was maintained at 0.62/1.28 yuan for 24-25 years. The company's two high-end 50M pixel CIS products are industry-leading in performance and are expected to benefit from future new machine releases. Refer to the semiconductor design to compare the company's average valuation, give it 110 times PE in 2024, and maintain the target price of 68.20 yuan.

Revenue increased year over year in 2023, and net profit to mother turned a loss into a profit. The company strengthened product development and sales in the field of consumer electronics and machine vision in 2023. In 2023, it achieved revenue of 2,857 billion yuan, an increase of 15.08% over the previous year; net profit to mother was 13.71 million yuan, after deducting net profit of 640,000 yuan from non-mother, all of which turned a loss into a profit.

High-end flagship products are pioneering the second growth curve of consumer electronics, and the smart security product matrix continues to expand. (1) Consumer electronics sector: The company's market share in the middle and lower tier sectors continues to increase; high-end products have opened up a second growth curve. The 50 megapixel product SC550XS has been successfully mass-produced and shipped smoothly. The new flagship SC580XS has received samples and is expected to be mass-produced in Q1 2024. The product is equipped with Stevie's next-generation pixel technology SFCPixel? -2 and many other technologies and processes bring excellent quality images to flagship smartphone cameras with performance advantages such as high dynamic range, low noise, 100% full pixel focus, and ultra-low power consumption. (2) Security field: The company released a number of professional-grade CIS products for machine vision. The product matrix continues to expand, supporting the rapid growth of the company's machine vision tasks.

Catalysts: Demand is gradually picking up; high-end CIS products are being released at an accelerated pace.

Risk warning: Technology research and development falls short of expectations; market competition intensifies.