2024H1's performance grew rapidly, optimistic about the increase in performance brought about by the release of new products; maintaining the “buy” rating of 2024H1, the company achieved revenue of 1.531 billion yuan, +68.26% year over year; net profit to mother 0.148 billion yuan, +199.76% year over year; net profit after deducting non-return to mother 0.112 billion yuan, +1872.87% year on year; gross profit margin of 33.19%, -1.91pcts year on year; 2024Q2 achieved revenue of 0.878 billion yuan in a single quarter , +66.80% YoY, +34.45% month-on-month; net profit to mother 0.12 billion yuan, +140.00% YoY, +334.87% month-on-month; net profit without return to mother 0.103 billion yuan, +237.50% YoY, +1028.36% month-on-month; gross profit margin 33.39%, -1.30pcts YoY, +0.46pcts month-on-month.

Due to the continued recovery in downstream demand, we raised our 2024-2026 net profit of 0.407/0.691/0.891 billion yuan (previous value was 0.403/0.69/0.879 billion yuan), corresponding PE 44.5/26.2/20.4 times. We are optimistic about the sufficient growth brought about by the gradual launch of the company's new products, and maintain a “buy” rating.

Continued growth in downstream demand+rapid increase in market share led to increased performance 2024H1 benefiting from the continued growth in demand in the downstream smart wearables and smart home markets, and the company's performance grew at a high rate.

At the same time, looking downstream, in the smartwatch/bracelet chip market, the company successively launched products such as BES2700IBP and BES2700iMP to achieve full coverage of smartwatches, sports watches and bracelets. The company's market competitiveness was further improved, shipments grew rapidly, and market share increased; 2024H1's smartwatch/bracelet chips accounted for about 28% of revenue, a significant increase over the previous year.

Looking at the incremental performance and downstream demand brought about by the continued recovery of downstream demand and the release of new products, according to IDC data, 2024Q1 global wearable shipments were 0.11 billion units, +8.8% year on year, China's wearable device shipments were 0.033 billion units, +36.2% year on year, and domestic smartwatch market shipments were 9.1 million units, or +54.1% year on year. Among them, adult smartwatch units were 5.05 million units, +62.8% year on year, and domestic bracelet market shipments were 3.7 Million units, +29.6% year over year; according to Canalys forecast, global smartwatch shipments are expected to increase 17% year over year in 2024. From the perspective of the company's products, 2024H1 has mass-produced and shipped the next-generation smart wearable chip BES2800, which has now been introduced in several customers' headsets, smartwatches, smart glasses and other projects, and is expected to gradually increase in 2024H2. We are optimistic about the company's competitiveness in the field of wearable chips, and with the gradual mass production of products, it will help the company continue to increase its market share and have sufficient growth momentum.

Risk warning: downstream demand falls short of expectations; customer introduction falls short of expectations; technology research and development falls short of expectations.