Event: The company publishes the 2023 Annual Report and the First Quarter 2024 Report. In 2023, the company achieved operating income of 1,297 billion yuan, -10.43% year-on-year, net profit to mother of -531 million yuan, -487.44% year-on-year, deducted non-net profit of -554 million yuan, or -677.80% year-on-year. 24Q1 achieved sales revenue of 329 million yuan, up 9.18% year on year, up 12.67% month on month, net profit to mother of 209 million yuan, -266.03% year on year, minus non-net profit of -213 million yuan, or -274.63% year on year. The 24Q1 consolidated gross margin was 27.68%, -5.15pct yoy, and +4.90pct month-on-month.

Due to the boom cycle in the semiconductor industry and the company's R&D investment, the company's performance in 2023 was under pressure. Global economic growth slowed in 2023, overall demand in the semiconductor industry was sluggish, terminal market sentiment and demand declined, the industry and terminal market were in a state of inventory removal, market competition intensified, product sales prices fell, and the analog chip industry was all affected. In 2023, the company continued to increase R&D investment, and the number of R&D personnel increased more than the previous year. In 2023, the company's R&D expenses were 499 million yuan, an increase of 64% over the previous year, causing short-term pressure on the company's performance.

AC/DC chip and battery management chip business revenue grew. Looking at various product lines, AC/DC chip revenue increased 38.16% year on year in 2023, mainly due to the gradual recovery in consumer electronics market demand; the company actively expanded the market, battery management chip business revenue increased 28.37% year on year; DC/DC chips and linear power chips were affected by the decline in terminal market sentiment and demand, and revenue declined year on year.

The DrMOS and multiphase controller business continues to advance due to continuous product iteration and diversification of product models. The company continues to diversify its product range. In 2023, the company will actively expand its market share in emerging application fields such as new energy, computing, and automobiles. The 30A to 90A DrMOS and 6-phase and 8-phase multiphase controllers have been mass-produced, and the overall performance of the newly released 90A DrMOS high current products is at the leading level in the industry.

Profit forecast: The company's 24-26 revenue is predicted to be 1,718, 21.90, and 2,709 billion yuan, respectively, and net profit to mother of -2.36, 0.25, and 148 million yuan. The company has successively developed a variety of high-performance chip products, which have positive long-term development prospects and maintain a “buy” rating.

Risk warning: semiconductor industry cycle fluctuates; product development falls short of expectations; market competition increases risk