Incident: The company released the 2023 annual report and the 2024 quarterly report. For the full year of 2023, the company achieved operating income of 472 million yuan, an increase of 7.06% over the previous year; realized net profit of 30 million yuan, a year-on-year decrease of 42.67%; realized deduction of non-net profit of 0.06 million yuan, a year-on-year decrease of 85.45%. In 2024, Q1 achieved operating income of 95 million yuan, a year-on-year increase of 18.26% and a decrease of 40.53%; net profit to mother -0.13 billion yuan, down 193.90% year on year, down 154.91% month on month; after deducting non-net profit - 0.18 billion yuan, down 211.60% year on year and 238.34% month on month.

Revenue grew steadily in '23, and high R&D investment dragged down Q1 performance in '24: In 2023, thanks to a sharp increase in wireless charging product revenue, large-scale delivery of signal chain products, and a significant increase in analog power management chip shipments, the company's annual revenue grew steadily year-on-year. In 2023, the company's overall gross margin was 28.79%, -3.96pcts year on year. Mainly because the recovery of the semiconductor industry fell short of expectations, terminal sales prices fell faster than supply chain side costs; the net profit margin was 6.38%, -5.54 pcts year on year. In terms of expenses, the company's sales, management, R&D and financial expenses rates for the full year of 2023 were 5.68%/6.46%/21.75%/-2.09%, respectively, with year-on-year changes of +1.43/+1.21/+6.85/+0.17pcts, respectively. Among them, the R&D cost rate and absolute value increased year-on-year, mainly due to a sharp increase in R&D personnel remuneration, new product development materials, and testing costs.

In Q1 2024, due to seasonal factors and increased R&D investment, the company's profit side was under pressure. Among them, Q1 R&D investment was 32.7436 million yuan, an increase of 81.26% over the previous year, accounting for 34.59% of the company's revenue.

The optical sensing series achieved a breakthrough in mass production, and the wireless charging product matrix continued to expand: In 2023, the company achieved major breakthroughs in core fields such as high sensitivity, high accuracy, and wide dynamic range through self-developed optoelectronic processes and coating technology. The above products can be applied to various signal chain optical sensing products such as ambient light sensing, proximity sensing, skin recognition sensing, environmental and proximity sensing, and optical displacement sensing. The above products can be applied to various signal chain optical sensing products such as smartphones, wearable devices, and electronic vehicles. Among them, in-ear detection sensors and narrow-slit three-in-one sensors have all entered mass production; the industry's first high-precision optical tracking sensor polarized crown chip with integrated rotation and compression detection functions for smartwatches has begun to be delivered to well-known customers in the industry. In terms of wireless charging, the company continues to improve a full range of 5W-100W wireless charging receiver and transmitter products, and pioneered the launch of 80W wireless charging receiver chips with process innovation and technological iteration to meet the application requirements of the Ministry of Industry and Information Technology's latest wireless charging standards and flagship brands. In addition, the company and leading manufacturers in the supply chain have successfully developed a 90nm 40V BCD process with 12-inch wafers, which can greatly reduce production costs and enhance the profitability of wireless charging products.

Actively expand the direction of domestic automotive electronics alternatives and create a new engine for performance growth: According to the company's annual report for 2023, according to the 2023 automobile production and sales situation released by the China Association of Automobile Manufacturers, China's NEV production and sales in 2023 were 9.587 million units and 9.495 million units respectively, with a market share of 31.6%, up 5.9pcts year on year; the rapid rise of the NEV market has brought new growth opportunities to the development of the semiconductor and automotive electronics industries. The company is also actively promoting automotive electronics R & D and layout. In the field of automotive electronics, the company uses rich and mature chip design and mass production experience in consumer and industrial application scenarios. On the one hand, the main layout is highly coordinated with existing consumer product lines, such as automotive wireless charging, automotive lighting, rain/fog detection light sensing, etc., and on the other hand, the company is committed to developing highly integrated product fields in automotive electronics that are in urgent need of domestic replacement. In 2023, the company's in-vehicle wireless charging transmitter chip has passed the AEC-Q100 vehicle regulation certification and has been verified and tested at several car manufacturers. At the same time, the company cooperated with leading new domestic car companies to develop a system basic chip (CAN SBC chip) for automotive-level applications, with the aim of breaking the monopoly of overseas manufacturers; this highly integrated single chip integrates CAN transceivers, system modes, failure safety function control, and power management functions, and overall R&D and testing is progressing smoothly.

Lowering profit forecasts and maintaining an “gain” rating: The company is an integrated circuit design company focusing on the development and sale of high-performance analog and digital-analog hybrid chips. The company has now formed a “power management+signal chain” dual drive product system. The main products include wireless charging chips, wired fast charging chips, LED lighting driver chips, signal chain optical sensors, and automotive electronic chips. At present, the company's products such as crown knob detection chips, TWS in-ear detection chips, and narrow-slit three-in-one chips have all been mass-produced. It is expected that they will be fully introduced to the market by the end of this year, and future sensor business revenue is expected to grow rapidly. At the same time, thanks to the increase in demand for terminals from old customers and the recent expansion of new customers, the company's wireless charging business performance is expected to grow further. Furthermore, in the automotive electronics business, the overall R&D and testing of CAN SBC chips is progressing smoothly. It is about to enter the vehicle certification and sample delivery stage, and is expected to provide performance increases in the future. Considering that the recovery of the semiconductor industry fell short of expectations, profit forecasts for 2024 and 2025 were lowered. It is estimated that the company's net profit for 2024-2026 will be 52 million yuan, 102 million yuan, and 135 million yuan respectively; EPS will be 0.65 yuan, 1.28 yuan, and 1.69 yuan respectively; and PE will be 60X, 30X, and 23X respectively.

Risk warning: risk of exchange rate fluctuations, risk of market competition, risk of macro-environment risk, risk of new product development falling short of expectations.