The company announced the third quarter results: 517 million yuan, an increase of 86.59% year-on-year, an increase of 6.32% month-on-month, and a net profit attributable to the parent company of -142 million yuan, a year-on-year decrease of 19.45% and a month-on-month decrease of 23.63%. In the first three quarters, the company achieved revenue of 1.366 billion yuan, a year-on-year increase of 36.49%, and net profit attributable to the parent company of -408 million yuan, a year-on-year decrease of 62.52%. The company's Q3 revenue hit a record high, the downstream automobile and consumer electronics boom recovered, and the industrial inventory returned to the normal level but the demand was weak. The decline in net profit attributable to the parent company was mainly due to the decline in the company's gross profit margin and the increase in expenses caused by the impact of equity payment expenses, and the company's short-term profits were under pressure. The company's automotive products are progressing smoothly, and the new products are gradually increasing, in addition to the acquisition of McGoon to expand the magnetic sensing territory, optimistic that the company will play an advantage in product layout, resource integration and other aspects, and maintain buying.

3Q24 Review: Revenue continued to hit a new high, high-intensity R&D and share-based payment led to short-term pressure on profits3Q24 The company achieved revenue of 517 million yuan, +86.59% year-on-year and +6.32% month-on-month, the main source of year-on-year growth was the steady growth of demand in the downstream automotive electronics field, and the company's related products in the field of automotive electronics continued to increase; The prosperity of the consumer electronics sector continues to improve; Most customers in the pan-energy industrial automation and digital power sectors have returned to normal demand. In 3Q24, the company achieved a gross profit margin of 32.06%, a year-on-year decrease of 4.39pcts and a month-on-month decrease of 3.27pcts, mainly due to the pressure on market competition prices. The expense side is mainly due to the increase in the impact of share-based payment expenses, which were 218 million yuan in the first three quarters, and if the impact of share-based payment expenses is excluded, the company's 1-3Q net profit attributable to the parent company is -190 million yuan. In 3Q24, R&D investment was 176 million yuan, and the R&D expense ratio was 34.12%, and the decline in gross profit margin and the increase in expenses led to short-term pressure on profits.

Outlook: The new products are progressing smoothly, and we are optimistic about the continuous expansion of the company's endogenous + epitaxial product matrixLooking forward to the future: 1) In the automotive field, the company has achieved a large number of shipments of products including isolation products, multi-channel tail light driver chips, magnetic current sensor chips, CAN/LIN, etc., the company's MCU+ products, stepper motor drives, single/dual channel low-side drives, high-side switch products, etc. are continuing to increase in volume, and we are optimistic that the new products will gradually increase in volume to drive the company's revenue; 2) On October 15, the company announced that the proportion of shares acquired by McGonn was adjusted from 79% to 100%, and as of the disclosure date of the third quarterly report, the company has obtained 62.68% of McGonn's shares. McGonn's products include magnetic switch position chips, magnetic current chips, magnetic encoded chips, magnetic sensors and related modules, etc., and the completion of the acquisition will further enhance the company's competitive position in the field of magnetic sensors.

Profit forecast and valuation The

prosperity continues to recover and the company's new products continue to increase, we forecast that the company's revenue in 24-26 years will be 19.3/25.6/3.26 billion yuan, with a year-on-year growth rate of 47.3%, 32.6% and 27.4% respectively. The corresponding net profit attributable to the parent company was revised down to -3.00/-0.87/120 million yuan (previous value: -1.85/0.59/280 million yuan), giving 8.3 times the 25-year PS (industry average 9.4 times), maintaining buying, and the target price of 149.02 yuan.

Risk warning: the recovery of the downstream prosperity is less than expected, the competition in the industry is intensifying, and the progress of mergers and acquisitions is less than expected.