Key points of investment:

2024 Interim Report: Revenue of 1.111 billion yuan, yoy +27.2%, net profit of 0.131 billion yuan, year-on-year reversal of losses after deducting non-net profit of 0.115 billion yuan, an increase of 66.86% year-on-year.

2024Q2's revenue in a single quarter was 0.668 billion yuan, up 40% year on year and 51% month on month, achieving relatively rapid growth; gross profit margin of 29.2% was basically the same year on year and month on month, and gross margin was stable; net interest rate was 14.1%, which significantly reversed losses year on year, mainly due to last year's profit being affected by irregular profit and loss.

Shanghai Beiling focuses on analog and power ICs, including 8 product segments. The application areas focus on industrial control and automotive electronics. Shanghai Beiling lays out 3 types of integrated circuits for power management, signal chain products and power devices, including power management, motor drivers, data converters, power chips, IoT front-ends, non-volatile memories, standard signal products, and power devices. Customers mainly focus on automotive electronics, industrial control, photovoltaics, energy storage, energy efficiency monitoring, power equipment, optical communications, home appliances, short-distance vehicles, high-end and portable medical equipment markets, as well as other consumer application markets such as mobile phone camera modules.

Continued investment in R&D accelerated the pace of new product launches in the first half of 24. Shanghai Beiling IC R&D uses mainstream analog and digital-analog hybrid process technologies, including digital-analog hybrid CMOS, high-voltage BCD, and specialty power devices. As of the 2016 mid-year report, the number of employees (including subsidiaries) in the company was 700, an increase of 14.19% over the previous year. Among them, there are 480 R&D personnel, accounting for 68.57% of R&D personnel. In the first half of 2024, the company launched nearly 500 new products, with more than 4,000 products.

Maintaining advantages in the field of special power chips. The power-specific chip business includes five categories: single-phase metering chips, three-phase metering chips, single-phase metering SoC chips, three-phase metering SoC chips, and power-specific MCU chips. The main products of the 2024H1 have all been upgraded from an 8-inch process to a 12-inch process. According to the 2024 interim report, the company held the first share in the State Grid IoT meter and single-phase meter tenders. High-precision ADCs continue to occupy the first market share of domestic brands in the power relay insurance industry, and progress has been made in distribution network marketing.

Adjust profit forecasts and maintain an “gain” rating. The 2024 interim report is in the middle of the performance forecast range of 0.12-0.14 billion yuan, which is in line with expectations. Due to the sharp adjustment of the semiconductor cycle starting at 22H2 and the company's new product expansion falling short of expectations, the 2024 revenue forecast was lowered from 4.3 billion to 2.5 billion, and the net profit forecast to mother was lowered from 0.86 billion to 0.27 billion. Added 2025/26 profit forecast of 0.3/0.32 billion yuan. Industrial-grade analog chips are comparable to the average PE 58X of companies (Shengbang Co., Ltd., Sirip) in 2025, which is 17% higher than Shanghai Beiling 2025PE 50X, maintaining a “gain” rating.

Risk warning: 1) New product expansion falls short of expectations 2) Risk of abnormal stock price fluctuations and exchange inquiries 3) Fluctuations in downstream semiconductor demand.