In 2023, revenue increased 15.5%, and net profit to mother increased 37%. Due to the structural recovery in demand in the consumer electronics market and the smooth sales of new and upgraded products launched by the company, the company achieved revenue of 887 million yuan (YoY +15.54%), net profit of 210 million yuan (YoY +37.37%), net profit excluding non-return to mother of 178 million yuan (YoY +37.68%); gross margin decreased by 1.2 pct to 43.47% in 2023. Among them, 4Q23 had revenue of 252 million yuan (YoY +65.0%, QoQ -3.9%), net profit of 82 million yuan (QoQ +63%), turning a year-on-year loss into a profit; net profit after deducting non-attributable net profit of 70 million yuan (QoQ +50%), which turned a year-on-year loss into a profit; and gross margin of 45.31% (YoY +3.2pct, QoQ +1.1pct).

With the exception of display driver chips, revenue from all other product lines increased. By product line, the company's power conversion chip revenue in 2023 was 349 million yuan (YoY +6.51%), accounting for 39%, and gross margin decreased by 2.48pct to 43.94%; power protection chip revenue of 304 million yuan (YoY +14.34%), accounting for 34%, gross margin decreased 1.05pct to 43.14%; intelligent networking delay management unit revenue of 112 million yuan (YoY +54.23%), accounting for 13%, gross margin increased 2.08 pct to 40.10%; signal chain chips Revenue of 51.67 million yuan (YoY +36.32%), accounting for 6%, gross margin increased 6.32pct to 52.98%; display driver chip revenue was 32.5 million yuan (YoY -3.54%), accounting for 4%, and gross margin decreased by 0.64pct to 41.78%.

Products and downstream products continue to be enriched, and Korea has set up a subsidiary to serve the Korean market. In terms of products, in addition to providing high-performance and high-reliability power management chips, the company is also continuously expanding and improving the product line in other categories such as signal chain chips and high-precision Hall chips. In the downstream sector, in addition to continuing to be deeply involved in consumer electronics, the company has actively expanded markets such as industrial control, medical electronics, automotive electronics, and network communications, and has obtained a certain amount of sales. Furthermore, the company is actively committed to expanding its global business and has set up a wholly-owned subsidiary in Korea to more closely serve the Korean market, including Samsung Electronics, a key customer.

The revenue of intelligent networking delay management units increased by 54% in 2023, and there is plenty of room to replace electronic detonators overseas.

The company's subsidiary, Semikentuo's intelligent networking delay management unit, increased its revenue by 54% to 112 million yuan in 2023. The product realizes functions such as remote link, accurate delay, and remote detection in the Internet of Things, and is mainly used in digital electronic detonators. According to data from the China Blasting Industry Association, China's electronic detonators have basically been replaced; however, overseas electronic detonators are being promoted slowly, the penetration rate is low, and the market space is large.

Investment advice: The recovery in consumer electronics demand is compounded by the introduction of new products to maintain the “buy” rating. We expect the company's net profit to be 2.78/334/388 million yuan in 2024-2026 (value of 282/339 million yuan before 2024-2025). The PE corresponding to the stock price on April 15, 2024 is 20/16/14x, respectively. The company benefited from the recovery in consumer electronics demand and the smooth introduction of new products, maintaining a “buy” rating.

Risk warning: New product development falls short of expectations; customer verification falls short of expectations; demand falls short of expectations.