The 24Q1 quarter revenue was -11% month-on-month, after deducting non-net profit +23% month-on-month. The results were in line with expectations.

The company's revenue in 2023 was 411 million yuan, +27.4% year on year, net profit of 175 million yuan, +23.1% year on year, net profit of 118 million yuan, +17.9% year on year; gross profit margin of 53.47%, year on year -3.95pct, net profit margin 42.50%, year-on-year -1.46pct, net profit margin 28.73%, year-on-year -2.32pct.

24Q1 quarterly revenue of 116 million yuan, -10.5% month-on-month, net profit of 0.51 million yuan, -0.5% month-on-month, net profit of 43 million yuan, +23.0% month-on-month; gross profit margin of 54.51%, +0.76pct month-on-month, net profit margin 43.51%, +4.34pct month-on-month, net profit margin 36.72%, +10.00pct month-on-month. The month-on-month increase in 24Q1 deducted non-net interest rate was mainly due to the Q1 R&D expense ratio of -8.52pct month-on-month.

BLDC master control chip MCU grew steadily in '23, and BLDC master control ASIC increased 145% year over year.

The company's largest business is the motor main control chip MCU. Its revenue for 23 years was 275 million yuan, +18.3% year over year, accounting for about 67% of total revenue, gross profit margin of 56.67%, -4.45 pct year on year.

The company's second largest business is the motor driver chip HVIC. Its revenue for 23 years was 66 million yuan, +18.0% year over year, accounting for 16% of total revenue, gross margin of 43.84 pct, -2.95 pct year on year.

The company's third largest business is motor control chip ASIC. Its revenue for 23 years was 48 million yuan, +145.0% year over year, accounting for about 12% of total revenue, gross profit margin of 52.44%, -8.13pct year on year. The increase in revenue in this business in '23 was mainly due to +157.5% year-on-year sales volume in '23.

R&D investment increased 33% year over year in '23, making it a milestone year for automotive-grade chips.

The company continues to increase R&D investment: in 2023, the total R&D investment of the company was 85 million yuan, +32.6% year-on-year, and the R&D cost ratio was 20.58%, an increase of 0.81 pct over the previous year. In '23, the company's sales in existing fields such as small smart appliances, power tools, and sports travel accounted for 71%, while sales in the white goods sector increased from 10% to 14%. At the same time, in '23, the company continued to focus on the field of automotive electronics and achieved landmark progress: it passed the ISO 26262 functional safety management system certification and actively promoted the gradual mass production of chip products in the automotive electronics field from small-batch trial production, accounting for 5% of sales in the automotive electronics sector in '23.

The leading domestic motor drive control chip maintains an “gain” rating.

As a leading manufacturer of BLDC motor drive control chips in China, the company collaborates on the three major technologies of chip+algorithm+motor to build the company's core competitiveness. Grand View Research predicts that the global BLDC motor drive control chip market will grow to nearly 4 billion US dollars in 2023, and there is plenty of room for the company to grow in the future.

The company's net profit for 2024-2026 is estimated to be 227/2.81/333 million yuan, respectively, corresponding to the 24/25/26 PE of 42/34/29 times, maintaining the “increase in holdings” rating.

Risk warning: R&D risk; supplier concentration risk; product quality risk; gross margin fluctuation risk, etc.