In recent years, the overall performance has declined, and there has been a non-recurring net loss in the first quarter of this year. At the earnings conference for the fiscal year 2023 and the first quarter of 2024, Lingdian Electric Control's Chairman and General Manager Wang Heping said, "Currently, the business income of our passenger vehicle and electrification products is relatively low, and we need to achieve certain economies of scale in order to reduce costs."

Lingdian Electric Control is a provider of automotive power electronic control systems. Its main business includes research and development, production, sales, and technical services for automotive engine management systems, pure electric vehicle power electronic control systems, hybrid electric vehicle power electronic control systems, and intelligent networked products.

In terms of performance, Lingdian Electric Control's revenue increased but net profit did not in 2023, with revenues of RMB 1.008 billion, an increase of 41.64% year-on-year, and net profit attributable to shareholders of RMB 49.1337 million, a decrease of 26.70% year-on-year.

In the first quarter of this year, Lingdian Electric Control's revenue was RMB 256 million. Wang Heping said that sales revenue from passenger vehicle and new energy businesses was only RMB 73.6271 million. It is worth noting that the company had a non-recurring net loss of RMB -1.4486 million in the first quarter.

Wang Heping said that the main reason for the company's profit decline is due to the continuous investment of considerable research and development and production resources, as well as factors such as long industrialization cycle of new business, fierce market competition, low product gross margin, and small revenue scale.

Regarding gross profit margin, Lingdian Electric Control's Vice President and Secretary of the Board of Directors Gong Benxin said that the company's overall gross profit margin in the first quarter of this year was 22.16%. "The main reason for the decline in the company's gross profit margin is the increase in sales revenue for the passenger vehicle business and electrification products with the low gross profit margin."

According to the annual report, Lingdian Electric Control's main source of revenue comes from gasoline engine electronic control system products. In addition to gasoline engine management system products, the company also sells pure electric vehicle VCU (vehicle control unit), MCU (motor control unit), electric motor and electronic control unit, multi-in-one controller, hybrid electric vehicle EMS, and T-BOX (vehicle networking control unit) products.

Regarding customers, Lingdian Electric Control's Director, Vice President, and CFO Wu Zhanghua said that since 2023, the company's new customers have mainly been passenger vehicle customers Ideal and Zero Run. Its Chairman and General Manager Wang Heping further mentioned that the company's GDI (direct injection) product has already been installed in vehicles from Ideal and Jianghuai.

Wang Heping said that the company has many competitors in the field of electric control for electrification, including Shenzhen Inovance Technology, Zhongshan Broad-Ocean Motor, Jingjin Electric, and Shenzhen V&T Technologies.

Regarding this, Wang Heping mentioned that the company's future core competitiveness lies in the integration of EMS and GCU and other products. In the institutional survey in May of this year, the company stated that in addition to the Zero Run project, the relevant products also include customers such as Wuling New Energy. "The integration of EMS and electrification products is the direction of the company's efforts, and the ECU+GCU+generator three-in-one product that the company is developing is attracting industry attention."

At the earnings conference, Lingdian Electric Control's inventory attracted attention from investors. As of the end of 2023, the company's inventory had a book value of RMB 419 million, accounting for 25.63% of current assets. The inventory continued to increase to RMB 457 million in the first quarter of this year.

In an institutional survey in May of this year, the company stated, "The increase in inventory in the first quarter was mainly due to the need to ensure stable supply to passenger vehicle customers. The company relocated the production line according to the plan, which resulted in the production of more inventory products. The company's chips are steadily being consumed, and a small portion of chips with slower consumption will be gradually consumed after the development of projects for mass production this year."

The China Science and Technology Innovation Board Daily reporter noticed that overseas markets may become a new layout point for the company. At the earnings conference, Wang Heping mentioned, "The company is actively exploring overseas markets for new revenue and profit growth points." In the semi-annual earnings conference held in October of last year, Wang Heping had stated that the company had no investment layout overseas.