Core views

1. In 2024Q1, the company achieved operating income of 602 million yuan, up 110.68% year on year and 4.75% month on month; net profit to mother was 101 million yuan, up 224.79% year on year. The performance in the first quarter exceeded expectations, and the off-season was not weak. As demand in the consumer electronics market, represented by smartphones, picks up, the company's main business is expected to maintain steady growth.

2. The company is a scarce supplier of end-to-end solutions for power management in China, and continues to improve the product layout around application scenarios. In the smartphone field, the company uses wired charging chips to reach deep partnerships with mainstream domestic mobile phone manufacturers, and is actively promoting the introduction of other product lines in the mobile phone field to increase the stand-alone value of the company's products in mobile phones. In the automotive and industrial fields, the company has invested a lot of resources, mass-produced a variety of new products and introduced many well-known leading customers in the industry, which is expected to bring new performance growth points in the future.

occurrences

The company achieved operating income of 1,780 billion yuan in 2023, an increase of 36.87% year on year; realized net profit of 261 million yuan, up 6.15% year on year; gross profit margin of 42.30%, down 0.74 pct year on year.

The company released its report for the first quarter of 2024. 2024Q1 achieved operating income of 602 million yuan, an increase of 110.68% year on year; realized net profit to mother of 101 million yuan, an increase of 224.79% year on year; and gross profit margin of 42.57%, up 1.34 pct year on year, which is close to flat from month to month.

Brief review

1. Business performance continues to grow steadily, and consumer electronics demand is picking up.

In 2023, the global semiconductor market is under great pressure due to macroeconomic factors such as weak terminal market prosperity and slowing economic development. With advantages such as technological innovation, product development and customer barriers, the company has enriched product categories, improved product layout, and continued steady growth in performance. In 2023, the company achieved operating income of 1.78 billion yuan, up 36.87% year on year; net profit to mother 261 million yuan, up 6.15% year on year; gross profit margin of 42.30%, down 0.74 pct year on year. The company continued to grow in 2024Q1, achieving operating income of 602 million yuan, up 110.68% year on year, up 4.75% month on month; net profit to mother of 101 million yuan, up 224.79% year on year; gross profit margin of 42.57%, up 1.34 pct year on year, close to flat month on month. Overall, the company's performance in the first quarter exceeded expectations, and the off-season was not weak. Currently, demand in the consumer electronics market, represented by smartphones, is picking up, which is expected to promote steady growth in the company's main business. According to IDC data, the 2023Q4 shipped 326 million smartphones globally, up 8.5% year on year, ending several consecutive quarters of decline; the 2024Q1 shipped 289 million smartphones worldwide, up 7.8% year on year, showing a good recovery momentum.

2. The company leads the smart terminal charging chip industry and expands horizontally to achieve full link coverage of power management chips.

The charging power of consumer terminals such as mobile phones has gradually increased. Conventional 18W charging power has been gradually replaced by 33W, and some high-end models and flagship models have introduced 200W or more charging power, driving the penetration rate and charging power of high-power charging to continue to increase. The company continues to launch more integrated and high-performance products on mobile phone wired charging chips, which can achieve up to 300W fast charging power, further maintaining its leading position in the industry. Based on its leading edge in the charging chip industry, the company strengthens cooperative relationships with mainstream domestic mobile phone manufacturers, actively promotes the introduction of other product lines in the mobile phone field, achieves full coverage of wired charging, wireless charging, screen driver chips, and lithium battery protection chips, and increases the stand-alone value of the company's products in mobile phones.

3. The company is actively expanding the non-consumer electronics sector, investing heavily in the automotive electronics business and making significant progress.

While the company is deeply involved in fields with original advantages such as smartphones, it is also actively expanding into fields such as automotive electronics and industrial applications, and continues to enrich its product matrix.

The company attaches great importance to the automotive electronics business, invests many resources, and develops multiple projects at the same time. The company moved from in-vehicle wireless wired charging to leading automotive manufacturers. With rapid iteration and continuous innovation capabilities, the company continues to expand the layout of new categories and products in the fields of automotive instruments, smart cockpits, ADAS and BMS. In 2023, the company's USB and wireless charging solutions achieved large-scale mass production on the client; new products such as high-performance DC-DC power chips, HSD chips, and e-Fuse chips achieved large-scale sample delivery on the client, and some customers have already entered the targeted design stage of the project. Benefiting from the growth of the automotive electronics market and the introduction of the company's products to many well-known leading customers in the industry, the company achieved revenue of 30.641 million yuan in the field of automotive electronics applications in 2023, an increase of 89.02% over the previous year, and a gross profit margin of 45.74%. In the industrial sector, the company continues to enrich product categories and plans to achieve an end-to-end product layout; actively expand the market for products in industrial and other fields, and achieve certain results in the fields of energy storage, drones, power tools, communications, etc. In the future, it is expected to further introduce industrial power supplies, AI Power and other fields, bringing new performance growth points.

4. We recommend continuing to pay attention to the company and maintain a “buy” rating.

As one of the leading analog and embedded chip design companies in China, the company continues to improve the product layout around application scenarios to provide customers with better end-to-end complete solutions. While the company is deeply involved in fields with original advantages such as smartphones, it is also actively expanding into fields such as automotive electronics and industrial applications, and the product matrix continues to be rich. We expect the company's revenue from 2024 to 2026 to be 2,412 billion yuan, 3.083 billion yuan, and the estimated net profit to mother will be 396 million yuan, 542 million yuan, and 633 million yuan respectively. The current stock price corresponds to PE of 38, 27, and 23 times, respectively, maintaining a “buy” rating.

6. Risk warning

Market demand falls short of expectations. Affected by macroeconomic changes, the development of the downstream sector faces a complex and serious situation. There are certain uncertainties that cause market demand to fall short of expectations; there is a risk that product development and iteration will not meet expectations; there is a risk that price and gross margin will fall short of expectations due to increased market competition; there is a risk that profit forecasting assumptions will not be established. Profit forecasting is based on the company's downstream application requirements to predict the company's product sales volume. There is a possibility that the actual demand volume will be lower than expected. As a result, the company's revenue will decline. According to sensitive estimates, if the sales volume of products falls short of expectations At 10%, the company's corresponding revenue fell by 10%, and net profit from the parent fell by about 10.1%.