Incident: The company released its 2023 annual report. In 2023, it achieved operating income of 281 million yuan (YOY +15.75%), achieved net profit of 72 million yuan (YOY -32.72%), and realized net profit of 64 million yuan (YOY -37.26%) after deduction. 2023Q4 achieved operating income of 110 million yuan (YOY +18.08%) and net profit to mother of 0.3 million yuan (YOY -10.38%).

Comment: The development and layout of high-performance analog chips is progressing steadily, focusing on expanding fields such as low-orbit commercial satellites. On the revenue side, by product, in 2023, the company's terminal RF front-end chips, RF transceiver chips, high-speed high-precision ADC/DAC chips, power management chips, microsystems and modules, and technical services achieved revenue of 0.03/0.99/1.07/0.49/ 0.22 billion yuan, respectively, an increase of 52.36%/-1.87%/18.02%/26.90%/123.18% over the previous year. During the reporting period, the company focused on opportunities in emerging fields such as data links, satellite communications, and digital phased array radar, focusing on the commercial low-orbit satellite market. It developed and iterated several series of mass-producible products, developed a variety of highly integrated power modular products in terms of power management chips, developed a variety of SIP component products for low-orbit satellites in microsystems and modules, and developed a variety of new products and models for the next generation of low-orbit satellites. On the profit side, the growth rate of net profit to mother was lower than the revenue growth rate. The main reason was that (1) gross margin decreased by 4.75 pcts to 83.12% compared to the same period last year, mainly due to changes in product structure and a decrease in the share of high-margin products. (2) The year-on-year cost ratio increased 11.27pcts to 48.30%, and the management/sales/R&D/finance expenses ratio increased by 1.42/1.01/12.33/ -3.50pcts year-on-year to 11.87%/5.89%/45.25%/-14.70%, respectively. The year-on-year increase in R&D expenses was mainly due to the company's continued increase in R&D project investment and the advance layout and expansion of the R&D team.

Profit forecast and investment advice: EPS is expected to be 0.74/1.02/1.47 yuan/share for 24-26. Considering the technical level of the company's high-performance analog chips and potential room for improvement in profitability, a PE valuation of 80 times over 24 years was given, corresponding to a reasonable value of 59.01 yuan/share, maintaining the “gain” rating.

Risk warning: orders are not continuous, equipment delivery falls short of expectations, major industry policy adjustments, etc.