Incident: On April 26, the company released its 2024 quarterly report. The main financial results for the first quarter were as follows: revenue of 203 million yuan, +8.7% year over month, +1.5% month on month; net profit to mother of 23.8 million yuan, +16.2% year on month, turning loss into profit; gross profit margin 36.7%, -2.4 pcts year on year, +0.9 pcts month on month.

The home appliance business performed well, and the standard power supply business entered a high growth stage. The company's Q1 revenue achieved year-on-month growth. Among them: 1) the dominant home appliance business performed well, especially the white electronics business, which maintained a high growth rate, with new products continuing to grow; 2) the standard power supply business still achieved good growth under fierce market competition. In particular, with the introduction of important domestic mobile phone brands, related revenue is expected to usher in high growth in the future; 3) In the industrial market, the performance was average due to poor inventory and demand in the communications market, but the optical storage and charging part of it still maintained good performance.

The optical storage and charging business has entered the “1 to N” stage, driving revenue growth. Based on the “high and low voltage integrated technology platform” and “digital power control technology platform” of independent research and development, the company has a natural competitive advantage in high-voltage application scenarios. In the context of inventory removal in the photovoltaic new energy market, the company's “optical storage and charging” business revenue still achieved a high growth of 108.33% compared to the same period in 2023, and is expected to continue to drive revenue growth in the future.

The server market achieved a “0 to 1” product breakthrough, creating a new growth curve. The company's supporting server products mainly include high-voltage auxiliary power chips, high-power driver chips, high-current DrMOS, digital multi-phase parallel controllers, etc. Among them, high-voltage auxiliary power chips and high-power driver chips have already begun mass production and shipment, high-current DrMOS has been verified on the client side, and the first generation of digital multi-phase parallel controllers has also been developed. Against the backdrop of continued strong demand for AI servers, it is expected to become a new high growth curve.

The launch of various vehicle specification products is expected to create new growth points. The automotive market is another important field of application of the company's high-voltage technology. In 2023, the company launched a variety of new rail-level products such as automotive-grade 1200V SiC MOSFETs, vehicle-grade 1700V power chips, and vehicle-grade 5000V isolated digital single-channel/multi-channel driver chips. Against the backdrop of intense competition in the automotive IC market, the company's high-voltage technical capabilities can bring differentiated products. We believe that the successful performance of the home appliance and optical storage and charging markets is expected in the future.

Investment advice: Naturally, the company's high-voltage technical capabilities have many advantageous application areas. They have been fully verified in the home appliance and optical storage and charging markets, and it is expected that this successful path will be repeated in the server and automobile markets in the future. In the short term, due to the impact of some market conditions such as telecommunications and industry competition on gross margin, the early profit forecast was adjusted appropriately. The company's net profit for 2024-2026 is expected to be 0.93/1.26/162 million yuan (previously predicted 2024/2025 was 136/196 million yuan), and the 2024/5/10 closing price corresponding PE is 49/36/28 times, maintaining a “buy” rating.

Risk warning events: downstream sentiment recovery falls short of expectations; risk of macro-environmental fluctuations