Incident: The company released its 2023 annual report. In 2023, the company achieved total operating revenue of 317 million yuan, an increase of 39.77%; net profit to mother of 165 million yuan, an increase of 41.85% year on year; net profit after deducting non-return to mother was 143 million yuan, an increase of 33.50% year on year. In Q4, the company achieved operating income of 125 million yuan, an increase of 32.08%; net profit to mother of 68 million yuan, an increase of 28.76% year on year; net profit after deducting non-return to mother was 64 million yuan, an increase of 20.15% year on year.

Products continue to be introduced to customers, and the core business has maintained rapid development: The company has experienced many years of technology accumulation. Currently, products have been verified and introduced by downstream users one after another, and the number of projects entering the trial and mass production stages is gradually increasing. By business, the company's inertial measurement unit and MEMS gyroscope product business grew rapidly. The business achieved year-on-year growth rates of 128.59% and 42.37% throughout the year. The company's products have been applied in batches and continuously upgraded and iterated during the application process.

Strong investment in R&D, setting up a booming circuit: The company maintains a high investment in R&D. In 2023, the company's R&D investment accounted for 25.29% of revenue. While continuing to improve the gyroscope and accelerometer design capabilities of existing products, the company is continuously expanding its product categories. The company's current research projects cover pressure sensors, automotive-grade high-performance MEMS IMUs suitable for L3+ autonomous driving, and automotive-grade functional safety 6-axis MEMS IMUs. As of December 31, 2023, the company has obtained 23 invention patents, 22 utility model patents, and 3 integrated circuit layout designs. It has formed an independent patent system and a closed loop of technology in the field of MEMS inertial sensors.

Investment advice: The leading position of high-end MEMS inertial sensors in China is stable, and high-growth projects such as automotive IMUs open up room for future growth. We estimate that the company's net profit for 2024/2025/2026 will be 234/3.21/446 million yuan, respectively. The 2024/2025/2026 PE multiples were 56.10/40.78/29.36, respectively. Maintain an “Overweight” rating.

Risk warning: New product development and sales fall short of expectations; industry demand falls short of expectations; domestic substitution falls short of expectations.