Incident: The company released its 2024 quarterly report. In 24Q1, it achieved sales revenue of 319 million yuan, +10.33% year over month, and -15.55% month on month; realized net profit of 31 million yuan, -8.83% year over year, after deducting non-net profit of 29 million yuan, +40.94% year on year.
Market demand for the company's smart home appliances and lithium battery management chips has picked up since 23Q4, and demand continued in 24Q1.
Since 23Q4, orders from overseas customers in the smart home appliance chip market have returned, and lithium battery management chips used in mobile phones also experienced peak season effects in 23Q4. At present, the company's chip sales price has been adjusted to the price before the current upward cycle, and the chip inventory of terminal product manufacturers is also generally at a reasonably low level. It is expected that the 2024 semiconductor industry cycle will enter a recovery cycle, and the company's inventory is also expected to gradually be digested. As customer inventory adjustments end and export orders for home appliances gradually return, the smart home appliance MCU market will gradually recover in 2024; AI computers and AI mobile phones are also expected to increase the lithium battery management chip market; the company's AMOLED display driver chips are also actively promoting the verification, introduction and increase of brand mobile phone screens.
The gross margin for 24Q1 was 33.85%, -5.0 pct year on year and -0.7 pct month-on-month. Mainly due to market competition, the company's product prices were under pressure. The company is actively negotiating with the foundry. As foundry costs fall, the company's gross margin is expected to improve in the second half of '24.
The new products are expected to gradually contribute to the increase. In 2023, the company's smart home appliance MCU achieved a breakthrough in entering overseas brand customers from 0 to 1, and will be actively promoted; the first WiFi/BLE Combo MCU has been developed and will be promoted in 2024; in 2024, the company will actively promote customer verification and mass production introduction of various AMOLED display driver chips for brand market specifications; in 2023, the company's first automotive-grade MCU passed the AECQ100 quality certification and achieved small-scale sales; in 2024, it will also be launched for laptops Iterative lithium battery management chip.
Profit forecast: The company's 24-26 revenue is estimated to be 1,584 billion yuan, 18.89 billion yuan, and 2,207 million yuan, respectively, and net profit to mother of 2.02, 3.07, and 410 million yuan. Considering the recovery in demand and the company's new product launch, the “buy” rating is maintained.
Risk warning: downstream recovery falls short of expectations; industry competition intensifies; customer development falls short of expectations