Event: The company released the 2024 annual and 25Q1 performance report, with revenue of 5.968 billion yuan in 2024, +109% year-on-year, net profit attributable to the parent company of 393 million yuan, +2663% year-on-year, and net profit attributable to the parent company of 391 million yuan, +64343% year-on-year. 25Q1 revenue was 1.750 billion yuan, +109%/-0.62% year-on-year, net profit attributable to the parent company was 191 million yuan, +1265%/+60% month-on-month, and net profit attributable to the parent company was 189 million yuan, +865%/+119% year-on-year. Here's what we say:

24 years of high performance growth and significant improvement in profitability. The company's operating income in 2024 will reach 5.968 billion yuan, a year-on-year increase of +109%, of which the revenue of smart phones/smart security/automotive electronics will be 32.9/21.5/530 million yuan, respectively, a year-on-year increase of +269%/+29%/+79%. The net profit attributable to the parent company was 393 million yuan, and the net profit not attributable to the parent company was 391 million yuan, respectively, +2663%/+64343% year-on-year, gross profit margin of 21.09%, +1.12pct year-on-year, net profit margin of 6.58%, +6.08pct year-on-year, and profitability was effectively improved, mainly because the company had more front-end investment in the new business of mobile phones and automobiles in the past few years.

In terms of business, the company's high-end material numbers applied to flagship mobile phones, and the shipments of intelligent driving and machine vision chips increased significantly. 1) Smartphones: Several high-end 50-million-pixel products used in the main camera, wide-angle, telephoto and front camera lenses of high-end flagship mobile phones have been used, and the revenue of high-end flagship mobile phones has accounted for more than 50%, and the shipments of 50 million pixel cost-effective products used in the main cameras of ordinary smartphones have also increased significantly year-on-year. 2) In the field of automotive electronics, the company ranked 4th in the global in-vehicle CIS market (TSR) in 2023, with the number of covered vehicle models continuing to increase, and the shipments of various products applied to intelligent driving (including surround, circumferential and forward-looking) and in-cabin also increased significantly year-on-year. 3) In the field of smart security, despite the sluggish downstream of security, new downstream such as drones, sweeping robots, industrial robots, humanoid robots, face payment, and electronic dictionary pens provide momentum for the development of the machine vision industry, and the company's new iterative products and new products have better performance and competitiveness, driving revenue to increase by 28.64% year-on-year.

The performance of 25Q1 hit a record high, and we are optimistic about the follow-up flagship mobile phone customer expansion and the increase in the volume of intelligent driving chips. 25Q1 revenue was 1.750 billion yuan, +109%/-0.62% year-on-year, net profit attributable to the parent company was 191 million yuan, +1265%/+60% month-on-month, net profit attributable to the parent company was 189 million yuan, +865%/+119% month-on-month, gross profit margin of 22.79%, +1.53pct year-on-year/+3.78pct month-on-month.

Maintain an "overweight" investment rating. The company's high-end smartphone products have entered the harvest period, and the company continues to expand new customers for flagship smartphones, and the volume of higher-value new products is expected to drive the performance of smartphones to maintain a high growth rate; The automotive business benefits from the trend of equal rights for intelligent driving, and the part numbers of high-end automobiles under development will gradually move towards mass production. AI will open up a new market for machine vision downstream and drive a new imagination space for smart security business. It is recommended to focus on the customer expansion and share increase of the company's various businesses, especially high-end mobile phone products. It is predicted that the revenue in 25-27 will be 86.49/110.98/13.998 billion yuan, and the net profit attributable to the parent company will be 9.41/12.72/1.688 billion yuan, corresponding to EPS of 2.34/3.16/4.20 yuan, and corresponding to PE of 40.8/30.2/22.8 times, maintaining the "overweight" investment rating.

Risk warning: the risk that the development of new products is less than expected, the risk that downstream demand is less than expected, the risk of intensified competition in the industry, the risk of technology iteration, and the risk of macroeconomic and policy risks.