Incident: On the evening of October 28, Fengyi Technology released its 2024 three-quarter report. In the first three quarters of 2024, the company achieved revenue of 0.433 billion yuan, an increase of 53.72% over the previous year, achieved net profit of 0.184 billion yuan, an increase of 48.23% over the previous year, and achieved net profit of 0.156 billion yuan without return to mother, an increase of 86.34% over the previous year. Corresponding to the 3Q24 single quarter, the company achieved revenue of 0.151 billion yuan, a year-on-year increase of 46.63%, a month-on-month decrease of 9.41%, and achieved net profit attributable to mother of 0.062 billion yuan, an increase of 51.39% year-on-year and a decrease of 13.53% month-on-month, achieving net profit without deduction of 0.052 billion yuan, a year-on-year increase of 72.36% and a decrease of 15.97% month-on-month.

Emerging fields such as white power, industry, and automobiles continue to expand, and the revenue structure is continuously optimized. Since 2024, the company has continued to dig deeper into the existing market potential through long-term R&D technology accumulation, and has continued to penetrate the downstream application field. In the first three quarters of 2024, revenue increased by 53.72% year-on-year, with varying degrees of growth in all downstream application fields. According to the company's 2024 semi-annual report data, in the first half of 2024, the company continued to expand in emerging application fields such as white goods, industry, and automobiles, and sales increased 86.27% over the same period last year. Due to the rapid growth rate of emerging fields, the company's sales to existing traditional fields such as small smart appliances, power tools, and sports travel accounted for 63.33%, and sales in this field accounted for 70.99% of sales in 2023.

Continue to increase investment in R&D to cultivate new engines for the development of automobiles, robots, etc. Since its establishment, the company has focused on the research and development of special chips for high-performance motor drive control. Through long-term R&D investment and technology accumulation, the company has designed independent intellectual property motor control processor core architectures, and achieved wide application of products in smart home appliances, computers and communication equipment, sports mobility, power tools, industry and automobiles through long-term R&D investment and technology accumulation. The company continues to increase its forward-looking R&D layout in traditional fields and emerging application fields, maintain market competitiveness for core products, and continue to increase investment in industrial control and automotive-grade chips. In the first three quarters of 2024, the company's R&D expenses totaled 0.065 billion yuan, an increase of 25.13% over the previous year. In the field of automotive electronics, the company has passed the ISO 26262 functional safety management system certification in 23 years, and growth is accelerating; in the field of industry and robotics, the company's current research projects include “key technologies for high-performance servo motion control chips”, etc., which are mainly used in servo control fields such as high-end robots and linear motors. As a leading BLDC enterprise, the company has pioneering and scarce advantages in the industrial and robotics fields.

Investment advice: The company's net profit for 24-26 is estimated to be 0.242 billion yuan, 0.346 billion yuan, and 0.484 billion yuan, respectively, corresponding to the current market capitalization PE of 57/40/28 times, respectively. Considering the continuous increase in BLDC motor market penetration rate, the company has core technology and high product cost performance in the field of BLDC motor control chips, and continues to cultivate new engines for the development of automobiles, industry, etc., and maintains a “recommended” rating.

Risk warning: Downstream demand recovery falls short of expectations; R&D progress falls short of expectations; new customers and new market development fall short of expectations; risk of increased market competition.