Leading domestic IC design companies are working together on multiple product lines. The company is one of the leading power management chip and control driver chip design enterprises in China. The company's business focuses on the two major segments of power management chips and control driver chips, which specifically cover the four major product lines of LED lighting power supply chips, motor control driver chips, AC/DC power chips, and DC/DC power chips. The products are widely used in LED lighting, home appliances, mobile phones, personal computers, servers, base stations, Netcom, automobiles, industrial control and other fields.

Demand side: Demand is picking up, and application scenarios are abundant, and the simulation industry has broken out of its trough. In the consumer electronics sector, global smartphone shipments increased 4.0% year-on-year in Q3 2024, reaching 0.316 billion units, according to IDC data. In the field of home appliances, white electricity has entered a mature period, emerging categories are booming, and high-quality and cost-effective products are increasingly being brought to consumers under the impetus of the supply side. In the field of lighting, smart lighting, as the core element of the smart home scene, has become an important development trend in the lighting industry. In the automotive electronics sector, the penetration rate of new energy sources has continued to rise in the past five years. By the first half of 2024, the penetration rate had reached 42%. In recent years, procurement demand for emerging applications such as AI and hybrid cloud from hyperscale data centers, traditional enterprises, and users has become stronger, which has contributed to the growth in demand in the server market.

Supply side: Local power management chip companies are expected to continue to benefit from localization. With the development of downstream markets such as 5G communications, new energy vehicles, and the Internet of Things, the number and types of electronic devices continue to grow, thus driving the rapid growth of the global power management chip market. In the field of LED lighting power supply chips, as one of the leading domestic power management driver chip design companies, the company is committed to process technology innovation, striving to improve the performance and reliability of chips and reduce the cost of chip production. Through the acquisition of Ling Ou Chuangxin, the company integrated the original motor business with Ling Ou's MCU products into a new motor control drive business line. The product portfolio solutions are mainly used in large and small household appliances and automotive-grade applications. The company's DC/DC power chip products have entered the marketing stage. They have been certified by two well-known foreign main chip manufacturers and many domestic main chip manufacturers, and mass production has been achieved in the fields of AIC, PCs, servers, etc. The company focuses on four product lines: LED lighting power supply chips, motor control driver chips, AC/DC power chips, and DC/DC power chips, and strives to improve the product portfolio. As downstream demand for power management chips grows and the localization process accelerates, the company is expected to further open up room for growth.

Maintaining the “buy” rating: In April 2023, the company completed the acquisition of 61.61% of Ling Ou Chuangxin's shares to develop the motor control chip business; in November 2024, the company plans to take full advantage of business synergy, improve product portfolio solutions, consolidate market position and technical capabilities in the consumer sector, and further strengthen the layout and breakthrough of automotive-grade products. The company already has a certain market advantage and market share in the LED lighting power management industry. After the merger and acquisition integration is completed, the company will share the customer relationship with the target of the acquisition, enhance the competitiveness of the overall solution through the product portfolio, promote customer penetration, accelerate business development, and strengthen its industrial position. Considering that the company's DC/DC power driver chip business is still in the investment period, expenses will continue to increase during the period, so the company's profit forecast was lowered and the “buy” rating was maintained. The company has not yet begun to raise capital, without considering the synergy of the acquisition of Sichuan Yichong. The company's net profit for 2024-2026 is -0.065 billion yuan, 0.081 billion yuan, and 0.217 billion yuan respectively, EPS is -0.74 yuan, 0.92 yuan, and 2.47 yuan respectively, and PE is 113X and 42X respectively in 2025 and 2026.

Risk warning: technology iteration risk, new product development risk, product price reduction risk, Fabless business model risk.