Incident: The company released its 2024 three-quarter report. In the first three quarters of 2024, the company achieved revenue of 1.899 billion yuan, a year-on-year increase of 57.49%; realized net profit to mother of 0.272 billion yuan, an increase of 50.82%; and realized deducted non-net profit of 0.269 billion yuan, an increase of 52.90% year-on-year. On a quarterly basis, in Q3 2024, the company achieved revenue of 0.649 billion yuan, up 19.00% year on year and 0.12% month on month; realized net profit to mother 0.067 billion yuan, down 16.27% year on year and 36.30% month on month; realized deducted non-net profit of 0.063 billion yuan, down 20.64% year on year and 40.67% month on month.

Results for the first three quarters were high year-on-year, and the cost ratio shrank: Revenue side: The company's performance grew rapidly in the first three quarters of 2024, mainly due to the steady expansion of the company's product scale and continuous optimization and innovation, as well as the recovery of industry recovery and terminal market demand. Profit side: The company's gross margin for the first three quarters of 24 was 40.86%, -1.34pcts year on year; net margin was 14.31%, -0.63pcts year on year. Expense side: The sales/management/ R&D/ finance expense ratios for the first three quarters of 2024 were 3.52%/8.79%/15.76%/-2.66%, respectively. The year-on-year changes were -1.15/+0.91/-0.90/+0.52 pct, respectively. The sales and R&D expenses rate decreased year on year.

With multiple application scenarios, the new products are progressing smoothly: while the company continues to consolidate its competitive advantage in the smartphone field, it is also vigorously expanding application scenarios in more fields throughout the consumer electronics, automotive electronics and industrial fields. In the field of mobile devices, the company continues to launch new products, expand new customers and new business opportunities, and continuously update and iterate; in terms of wired charging, the wired charging solutions introduced by the company can cover 10W-300W charging power and occupy a leading position in the market; in terms of wireless charging, the company has now mass-produced wireless charging transmitter, receiver and transceiver integrated chip products, which have been used in smartphones, wireless chargers and other smart devices of well-known customers. In the field of smart energy, the company's self-developed fully integrated flyback solution POWERQUARK? It can further drastically reduce the size of the adapter while improving conversion efficiency, and is currently being continuously promoted for introduction into more customer products. In the field of automotive electronics, the company's automotive electronics business revenue has grown rapidly year on year. The products have entered many well-known automotive Tier1 and OEM car manufacturers, and international customers have also made breakthroughs; the company has launched a variety of automotive chip products, including automotive wired/wireless charging management, eFuse chips, automotive driver chips, automotive LDO chips and other DC-DC chips, involving application fields such as body control, smart cockpit, domain controllers and ADAS. In the field of general-purpose products, the downstream application fields of the company's general-purpose chip products cover pan-consumer electronics, industrial and other fields. In the future, the company is expected to enter the fields of high-voltage industrial power supplies and AI.

The consumer electronics market continues to recover, which is expected to benefit from AI phones: According to data released by Canalys, global smartphone shipments in 2023 are about 1.129 billion units, down about 5% from 2022. Global smartphone shipments are expected to rise to 1.174 billion units in 2024, an increase of about 4%. The consumer electronics market represented by smartphones continues to recover. AI empowering consumer electronics, represented by smartphones, has become a consensus in industry development. In the future, with the hardware iteration of AI phones, smartphone demand for computing, storage, and power management chips will gradually continue to increase, and the corresponding chip market development has potential for growth. In the field of smartphone wired charging management chips, the company has the most advanced technical level and market competitiveness in the global industry, and has industry innovation and competitive advantages in charger GaN encapsulated products, Buck/BoostCharger, etc. The integrated wired charging management chip launched by the company, including protocol communication, charge pump charging management, main charging management, etc., represents the leading level in the industry and can more effectively help customers improve product efficiency and optimize costs. Furthermore, it has also been recognized by more leading consumer electronics brand manufacturers for wireless charging management chips, lithium battery management chips, display driver chips, and DC-DC chip products. In terms of lithium battery management chips, the company has now mass-produced lithium battery protection chips, which are used in smart phones, mobile power banks, and smart wearables. The company's battery meter chips are progressing smoothly.

Maintaining a “buy” rating: The company has a key layout in several major markets. In the future, it will blossom more in the fields of mobile communications, automotive electronics, adapters, mass consumption, etc., and the company will continue to improve the entire charging link product ecosystem around these fields. With forward-looking product definition capabilities and strong R&D capabilities, the products have advantages such as leading performance and high reliability, and have been widely recognized by customers in the fields of smart phones, automotive electronics, industry and pan-consumer; along with the recovery trend of the consumer electronics market and continuous accumulation of achievements in the automotive electronics field, the company is expected to become the world's leading analog and embedded chip enterprise; the company's net profit for 2024-2026 is expected to be 0.366 billion yuan, 0.555 billion yuan, and 0.709 billion yuan, respectively. EPS is 0.86, 1.30, and 1.67 yuan/share, respectively, and the corresponding PE is 45X, 30X, and 23X, respectively.

Risk warning: Production capacity release falls short of expectations, risk of market demand fluctuations, risk of price fluctuations of important raw materials, risk of market competition.