Key topics of the sub-qualification:

Incidents:

Nanoscin's 2024 semi-annual report shows that the company achieved operating income of 0.849 billion yuan, an increase of 17.30% over the previous year; net profit to mother was -0.265 billion yuan, and non-0.286 billion yuan was deducted from mother.

The second quarter of 2024 achieved operating income of 0.486 billion yuan, an increase of 34.18% over the previous quarter, and net profit to mother of -0.115 billion yuan.

The revenue side grew steadily, and the profit side was temporarily under pressure. With the recovery of downstream demand and the release of new products, the company's H1 revenue increased year-on-year in 2024, and Q2 revenue continued its month-on-month growth trend, and QoQ +34.18%. Excluding the impact of share payments of 0.147 billion yuan, in 2024, H1 Company's net profit attributable to mother was -0.118 billion yuan, and non-0.139 billion yuan was deducted from mother. The company focuses on market development in the downturn cycle. Although Q2 gross margin declined year-on-year, it has clearly recovered month-on-month since 23Q4. In the first half of 2024, the company strategically invested resources to promote long-term growth, with sales, management and R&D expenses reaching 0.543 billion yuan. Furthermore, the company's net cash flow from operating activities was 0.008 billion yuan, which was corrected.

R&D continues to increase, and innovation drives the future. Excluding share payments, the company invested 0.216 billion yuan in R&D, an increase of 25.86% over the previous year. Driven by high R&D rates, new products continue to be launched. 1) Sensors: In terms of magnetic sensors, automotive-grade programmable magnetic switches are being mass-produced, magnetic wheel speed sensors are being mass-produced, and body height sensors are being developed smoothly. In terms of pressure sensors, absolute pressure, gauge pressure, and differential pressure series have been tested and partially mass-produced. 2) Signal chain: Capacitive optocoupler isolation technology is mature and implemented, and digital silicon ASICs have reached the advanced level in the industry. Mass production of MCU+ products began and applied to automotive electronic actuators. In terms of general-purpose products, industrial vehicle interface and operational amplifier products are expanding smoothly. 3) Power management: large-scale shipments such as stepper motor drives; 4-channel 75W ClassD audio amplifier sampling. Launched for automobiles: LED drivers and FlyBCAK products have been released throughout the fields of taillights, OBC, etc.; vehicle standard main drive safety gates are being driven by client testing and verification; DCDC is speeding up development. Furthermore, various products in the company's Sic business were successfully launched.

Seizing the opportunity of vehicle regulations, the pan-energy sector is about to recover. The company strategically covers fields such as automotive electronics, pan-energy, and consumer electronics, where the share of automotive electronics is growing rapidly. Currently, the company's products have been successfully introduced into automotive three-electric systems, body control, etc., and new products are continuing in the fields of smart cockpits, vehicle domain control, and smart lighting; at the same time, the company's major international customers are developing smoothly, and large-scale shipments are being made to the European market. In addition to this, there are clear signs of recovery in demand in the pan-energy sector. Various consumer electronics products are being shipped on a large scale, and the company's platform-based development is accelerating.

Profit prediction and investment suggestions: The company is a leader in automotive-grade analog ICs. It can mass-produce all types of digital isolation chips. The products cover sensors, power management, and third-generation semiconductors, and gradually achieve a platform-based layout. The company's automotive side layout predates industry competition, and many new automotive clients have now been successfully introduced. Despite being affected by the boom in the industry and high investment, the profit side is temporarily under pressure. We expect the company's revenue for 2024-2026 to be 1.821/2.544/3.205 billion yuan (2024-2025 original value 1.865/2.607 billion yuan, plus 2026 forecast value), and net profit to mother of -0.185/0.056/0.257 billion yuan, respectively (2024-2025 original value 0.048/0.306 billion yuan, additional 2026 forecast value). In the long run, with the company's card position layout in the fields of new energy vehicles and pan-energy, growth is safe. Maintain the company's “hold” rating.

Risk warning: New product development progress falls short of expectations, the company's customer development falls short of expectations, downstream terminal market demand continues to decline, industry competition risks.