Event: the company released its semi-annual report in 2023. In 2023, H1 realized revenue of 649 million yuan, down-7.47% from the same period last year; realized net profit of-191 million yuan, turning to loss over the same period last year; deducting non-net profit of-206 million yuan, turning to loss over the same period last year; from a quarterly point of view, the company's Q2 revenue in 2023 was 348 million yuan, down 4.62% from the same period last year and an increase of 15.30% compared with the same period last year Realize the return to the mother net profit of-134 million yuan, turn to a loss over the same period last year, increase the month-on-month loss; realize deduction of non-net profit-149 million yuan, and increase the month-on-month loss.

Short-term performance pressure, provision of inventory impairment affects profits: revenue side: the company's H1 performance declined year-on-year in 2023, the main reason: 1. Affected by the international situation, macroeconomic environment and other factors, market consumption is weak, the terminal demand is insufficient; 2. Due to the fact that there are more stocks in the industry and terminal market and the demand to digest their own inventory, the market demand for the company's products declined in the first half of the year. Profit side: the company's overall gross profit margin of H1 in 2023 was 31.63%, down 10.56 pct from the same period last year; the net profit margin was-29.51%; it was 42.89 pct; the company's gross profit margin declined, mainly due to the continuous decline in market climate; the company's net profit margin declined, mainly due to: 1. The company continued to increase investment in research and development, during which the cost rose, 2. 5%. The company is prepared to increase the price of inventory by 64.0164 million yuan. Expense side: the rate of H1 sales / management / R & D / financial expenses in 2023 is 7.23%, 9.20%, 37.57%, 0.50%, respectively, and the change in the same period is + 2.77/+4.22/+17.11/-0.79pcts. The rate of R & D expenditure changes greatly, which is mainly due to the decline in revenue compared with the same period last year, but the company still increases its R & D investment and increases its R & D expenses.

To expand the layout of full range products, the release of new products is worth looking forward to: the company has formed a multi-category, wide coverage, cost-effective product supply system in the field of power management analog chips, and gradually expand signal chain chip products. The company's products are widely used in automotive electronics, communication electronics, computing and storage, industrial applications, consumer electronics and other fields. In 2023, the company's technology research and development progress smoothly, launched a number of new products: (1) AC-DC product direction continues to launch new products, the company's product portfolio includes PFC, AHB (international leader), ACF (international leader), ZVS, QR, PSR controller, GaN sealing chip and protocol chip, etc., to further promote the energy efficiency upgrade and miniaturization of power products. (2) among the DC-DC products, the company has released a number of step-down products that can be used in automotive electronics, covering the 5V DrMOS (intelligent power level) and multi-phase controller products to the market, which has been further recognized by more customers in the computing field. (3) in the direction of linear power products, the company has developed a number of automobile-grade LDO, and launched a number of ultra-low noise, high performance and high current LDO that can be used in communications and servers, completing the important layout of LDO products. The company has launched the industry-leading 18V/50A power tube integration products, which have been widely praised by customers in the computing field. (4) in the direction of BMS products, the company has launched 13 series of low system cost analog front-end chips and high-precision low-string protection series chips. In view of the new national standard of electric two-wheeler, the company has made the corresponding product layout, can provide the overall solution, is in the market accumulation stage. (5) on the signal chain products, the company has added clock products and linear products.

At the end of H1 in 2023, the company has mass-produced several clock chips, linear products have been mass-produced amplifiers, comparators, analog switches and other products.

Deep into the field of analog chips, equity incentives demonstrate confidence: according to WSTS, global sales of analog integrated circuits are expected to grow from $39.3 billion to $91 billion from 2012 to 2023, with a compound annual growth rate of more than 75.00%. The demand for analog integrated circuits in the Chinese market is gradually expanding. At present, China's analog market accounts for more than 50% of the global demand, which is the most important consumer market for analog chips in the world. The company has formed a multi-category, wide coverage and cost-effective product construction system in the field of power management analog chips. The company's products take analog chips as the core, and have formed two product matrices of power management chips and signal chain chips. four types of power management product lines, including AC-DC chips, DC-DC chips, linear power chips and battery management chips, and five types of signal chain product lines, including testing products, interface products, converter products, clock products and linear products, are constructed, covering the main categories of analog chips in various application fields. A multi-category and multi-level chip development pattern is constructed. The company issued the 2023 restricted stock incentive plan on May 30, 2023: this incentive plan grants a total of 14.63551 million restricted shares, accounting for about 3.28% of the company's total share capital, with a grant price of 14.61 yuan per share. The company's performance evaluation target is set as follows: based on the performance in 2022, the growth rate target for 23-25 years is not less than 10%, 20%, 30%, 40% respectively. The purpose of this incentive plan is to further improve the company's long-term incentive mechanism, attract and retain talents, fully mobilize the enthusiasm of employees, and combine the interests of shareholders, the interests of the company and the personal interests of employees.

Downgrade profit forecast and give "overweight" rating: the company's products cover all major analog chip categories, building a multi-category and multi-level chip development pattern. Under the influence of downstream diversified demand, the analog chip market continues to deepen and expand, showing a development trend of differentiation, integration, high efficiency and intelligence.

The company is expected to rely on a comprehensive product layout and self-research process system, continue to enhance the competitiveness of products, drive performance to restore stable growth. Affected by the decline in overall demand in the downstream terminal market, the company's performance in the first half of the year is under short-term pressure, and we downgrade our profit forecast. it is estimated that the company's net profit for 2023-2025 will be-21 million yuan, 14 million yuan and 71 million yuan respectively, EPS will be-0.05,0.03,0.16 yuan respectively, and the PE for 2024-2025 will be 963X and 190X respectively.

Risk hints: market competition risk, lower-than-expected downstream demand, technology development and iterative upgrade risk, intensified market competition