2023: The market is slowly recovering, and revenue is improving quarter by quarter. We expect that new PC products will drive revenue growth in 2023, and that the company will achieve revenue of 433 million yuan (yoy: -29.91%); net profit to mother of 143 million yuan (2.8 million yuan in '22), net profit after deducting non-return to mother - 157 million yuan (-40 million yuan in '22). 4Q23 achieved revenue of 149 million yuan (yoy: +12.99%, qoq: +18.24%), net profit to mother of 55.34 million yuan, and year-on-month losses increased. Product prices were pressured by downstream customers in '23 due to the loss of inventory and mismatch between supply and demand, leading to a large year-on-year decline in annual revenue, and market demand only gradually recovered in the second half of '23. The profit side continued to lose money due to a loss of 27.04 million yuan due to a drop in inventory prices throughout the year, compounded by a large amount of equity incentive expenses. Considering that the company's new products have been launched one after another in the PC and automobile sectors, and revenue is expected to resume high growth after 24 years, we gave 24/25/26 revenue of 7.08/9.19/1,169 million yuan, 10 times 24PS (comparable to the company Wind's consensus estimate of 6.5 x 24PS), corresponding to a target price of 49.7 yuan, a “buy” rating.

2023 review: Downstream inventory performance was under pressure in the first half of the year. Looking at the sub-business segment, it gradually stabilized in the second half of the year: 1) MCU chips achieved revenue of 195 million yuan (yoy: -32.66%). Affected by falling demand for traditional consumer electronics and price pressure, gross margin fell 13.2 pct to 17.73% year on year, and sales also fell 28.02% year on year. However, the revenue of EC and PD series products used in computers and peripherals was 106 million yuan (yoy: +52.52%), while 32-bit MCU sales increased quarter-on-quarter.

2) Analog signal chain chips achieved revenue of 76 million yuan (yoy: -55.29%), and sales fell 4.09% year on year. Shipments declined mainly due to the decline in shipments of single-section BMS due to terminal customer inventory. Shipments resumed at the end of 3Q23. 4Q23 shipments have already exceeded the same period in '22. 3) Health measurement AIOT chips achieved revenue of 154 million yuan (yoy: +4.90%), and sales increased 56.49% year over year, mainly benefiting from the recovery in demand from major customers. As of the end of 2023, the inventory was 190 million yuan, and the number of inventory turnover days has basically returned to normal levels.

2024 outlook: Products in the PC field are expected to be released. The company's trough period of 2-5 BMS blossoms in multiple fields has passed, and the 24-year revenue growth rate is expected to exceed 60%: 1) PC business: The company's EC, PD, and USB products have all been used in domestic PCs. Among them, EC products have a high market share in clients, and second-generation EC has begun to be imported into leading domestic companies for verification. As downstream customers gradually expand and the company's market share increases, the overall sales volume of PC products is expected to increase. 2) BMS business: The 2-5-section BMS used in the fields of laptops, power tools, drones, etc. has been shipped in small batches to clients, and is expected to increase revenue contributions this year. 12-18 section BMS AFE chips that meet the ASIL-D functional safety level are progressing normally.

Investment advice: Target price is 49.7 yuan. Maintaining the “buy” rating, we are optimistic that the company will build a core product matrix around the “analog signal chain+MCU”. As industry sentiment recovers, the revenue for 24/25/26 is expected to be 708/9.19/1,169 million yuan, respectively. Considering the company's successive launches of new products in the PC and automotive fields, revenue is expected to return to high growth after 24 years. 10 times 24 PS (comparable to the company Wind's consensus estimate of 6.5 x 24 PS), corresponding to the target price of 49.7 yuan, is a “buy” rating.

Risk warning: The DDR5 penetration rate fell short of expectations, and prices continued to fall due to increased competition.