Affected by the downturn in the industry market, H1's revenue declined slightly in 2024. The company released its 2024 semi-annual report. In 2024, H1 achieved revenue of 2.107 billion yuan, a year-on-year decrease of 5.15%; net profit to mother was 0.197 billion yuan, down 11.10% year on year. Among them, Q2 2024 achieved revenue of 1.1 billion yuan, a year-on-year decrease of 4.55% and a month-on-month increase of 9.20%; net profit to mother was 0.11 billion yuan, up 2.55% year-on-year and 26.33% month-on-month. Although the industry market continues to be at a low level of prosperity, the company has a solid business foundation, steady operation, and benefits from the company's comprehensive competitive advantages in technology, products, markets, etc., the company has maintained good profitability. In the future, with the natural elimination of industry channel inventory and the gradual restoration of industry prosperity, the company may usher in a new round of growth. We maintain our previous profit forecast. We expect net profit to be 0.722/0.884/1.004 billion yuan for 2024-2026, and 1.50/1.84/2.08 yuan/share for EPS, respectively. The current stock price corresponding to 2024-2026 PE is 29.4/24.0/21.2 times, respectively, maintaining a “buy” rating.

Continue to carry out core business research and development to help the company develop high quality, continue to develop various core technologies, and promote the continuous improvement of the company's overall competitiveness. In 2024, H1 carried out research and development of SRAM products of various types and capacities, and sent samples to customers; carried out the development and launch of various processes, types of matrix and high-brightness LED driver chips for the automotive and non-automotive markets, and launched various products such as low-power matrix LED driver chips, high-side constant current driver chips, synchronous step-down and constant voltage LED driver chips, etc.; continued to carry out various products such as LIN, CAN, and Research and testing of network transmission products such as GreenPhy and G.vn. Among them, GreenPhy's first product can already be mass-produced.

Actively carry out customer development and market promotion to provide new impetus for development in the security monitoring market. In the consumer security monitoring market, the company increased the promotion of T23 products and planned more cost-effective T32 products to meet the new demand points of the market; in the automotive, industrial, medical and other industry markets, companies actively promoted products to increase the delivery of various products such as DDR4 and LPDDR4. In the automotive, industrial and medical fields, the company continued to successfully complete the design and introduction of products; in the Flash product market, the company strengthened Flash Promote products in various fields, and continue to send samples to customers to promote product evaluation and design introduction.

Risk warning: Downstream demand falls short of expectations, market competition is fierce, and product development progress falls short of expectations.