Event: On March 29, Siruipu released its 2023 annual report. The company realized operating income of 1.094 billion yuan, down 38.68 percent year-on-year, and net profit attributable to its parent -0.035 billion yuan, down 113.01 percent year-on-year.

Q4 revenue improved significantly month-on-month, and price pressure led to a decline in gross margin. In the fourth quarter alone, the company achieved revenue of 0.28 billion yuan, up from -10.93% YoY, up from +39.34% YoY, while net profit -0.051 billion yuan, down from the previous quarter.

although the weak end demand coupled with the impact of customer de-stocking, the company's revenue and profit declined year-on-year in 2023, but 23Q4 company's revenue improved significantly, mainly due to the downstream customer de-stocking has come to an end, the company's business inflection point gradually appeared. In terms of gross margin, Q4 gross margin was 46.61 per cent, down 3.41pct month-on-month, as prices remained under pressure.

signal chain, power management and other new products continue to launch. In terms of signal chain chips, products are customized and a variety of operational amplifier products with excellent performance are introduced. New ADC and DAC products are used in industrial automation, medical, data center, server and other fields. CAN series products suitable for mass production in industrial and automotive fields. Power management chips, automotive-grade power product reserves continue to be solid, a number of DCDC, PMIC products mass production. Industry-leading linear regulator products TPL8033 achieve mass production shipments, high-precision low-temperature drift coefficient voltage reference new products are widely used. In terms of embedded processors, a total of 26 products in the two major series of mainstream product lines of the TPS32 mixed-signal microcontroller family have been released in mass production, benchmarking the industrial and consumer sectors. And actively expand products in digital power supply, inverter, energy storage, motor drive, human-computer interaction (HMI) and other fields to achieve coverage.

mergers and acquisitions Chuangxin micro to broaden the product line, self-built test center to strengthen the supply chain. Innovation core micro-main research consumer BMS chip, Srepu main research direction for the industrial regulations, car regulations BMS chip, its product technology route and the company's research and development layout fit, downstream applications strong complementary. Through the acquisition of core micro, will provide a boost to the company's growth on the consumer side and the BMS technology route. In addition, the company's self-built Suzhou test center officially put into operation, in the high-end product wafer testing and finished product testing link will achieve independent control, enhance the synergy of research and development technology and test process.

The market expansion of car regulations has been effective, and the value of bicycles has steadily increased. Good progress has been made in automotive-grade products, with more than 20 categories totaling more than 110 products on the market, covering applications such as power, cockpit, smart driving, body and chassis in automotive electronic systems. At the same time, the company launched a strong new car regulations: the domestic leading high-integration automotive-grade PMIC chip, high-performance automotive push-pull transformer drive chip TPM650xQ series, as well as the first domestic support for specific frame wake-up automotive-grade CAN transceiver, as well as a number of high-precision LDO products.

investment suggestion: we expect the company's net profit to its parent in 2024/25/26 to be 1.14/3.23/0.537 billion yuan respectively, and the corresponding current price PE in 2024-2026 to be 120/42/25 times respectively. the company's performance in 2023 is under pressure, but now it has gradually reached an inflection point, and in the long run, with the company's card layout in the fields of new energy vehicles and pan-energy, growth is safe. Maintain a "recommended" rating.

risk: the risk of insufficient iteration of product development, the risk of lower-than-expected downstream demand, and the risk of market competition.