Key points of investment

The downstream market gradually recovered, and performance increased significantly. In 2024, the consumer sector, represented by mobile phones, continues to pick up, and inventory removal in the pan-industrial sector is nearing its end. It is expected to enter a moderate recovery in the second half of the year. The company achieved revenue of 729 million yuan in 24Q1, +42.03% YoY, -0.75% month-on-month, net profit of 54.38 million yuan, +80.04% YoY, -60.80% month-on-month, gross profit margin 52.49%, -0.17% YoY, and +5.27% month-on-month, mainly due to the promotion of new products and application market expansion. Under the recovery trend in the downstream market, revenue is expected to grow quarterly throughout the year.

New products are being launched on the market one after another, driving long-term growth. The company continues to develop more than 900 new products in industrial control, automotive electronics, communication equipment, consumer electronics, and medical instruments, including high-precision voltage benchmarks, high-precision current detection amplifiers, high-speed low-side gate drivers with negative input voltage capability, low-side driver chips with 8-channel PWM control output, 120V high-speed half-bridge driver chips, and automotive-grade synchronous step-down converters. By the end of 2023, the company had more than 5,200 products in 32 categories for sale. The company launches hundreds of new products every year, and the number of marketable products continues to accumulate, providing long-term and steady support for the company's performance growth.

Focus on R&D, and equity incentives bind core talents. By the end of 2023, the company had 1,029 R&D personnel, accounting for 72.72% of the company's total number of employees, an increase of 14.84% over the previous year.

In 2023, the company successfully implemented the “2023 Stock Options Incentive Plan”, which granted 1,112 personnel, including core managers and core technical (business) executives. The award price was 66 yuan/share, which fully stimulated the enthusiasm and vitality of employees and promoted the company's continuous development.

Investment advice:

We expect the company's 2024-2026 net profit to be 4.3/64/93 billion yuan, maintaining a “buy” rating.

Risk warning:

Market recovery fell short of expectations; risk of price fluctuations in raw materials and packaging; industry competition increased risk; product development and technological innovation fell short of expectations.