Incidents:

The company released its semi-annual report on August 26, 2023. The company achieved revenue of 404 million yuan in the first half of the year, or -21.68% year-on-year. Net profit to the mother was -80 million yuan, or -312.90% year-on-year, and basic earnings per share were -0.20 yuan.

Global semiconductor demand has declined in the short term, and future growth is expected. During the reporting period, since the world is still in the semiconductor inventory digestion period and downstream market demand is declining, WSTS data shows that the total sales volume of the 2023Q2 global semiconductor market was 124.5 billion US dollars, down 17.3% from the previous year. As inventories are gradually digested, demand in emerging fields such as traditional industrial control, network communication, and next-generation information technology will gradually resume growth in the future, and global demand for integrated circuits is expected to bottom out and pick up. WSTS predicts that the global integrated circuit market will drop 13% year over year to reach US$412.832 billion in 2023; a slow recovery will follow, with a growth rate of 13.9% in 2024.

Increased R&D investment and smooth promotion of new products

During the reporting period, the company had 371 R&D personnel, up 30.18% year on year; employee remuneration was 111 million yuan, up 29.24% year on year; as R&D personnel remuneration and R&D project expenses all increased, R&D expenses increased 40.60% year on year, and total R&D investment accounted for 51.48% of operating income, an increase of 22.81 pct over the previous year. The company's technical level continues to improve. Based on market demand, it has further enriched FPGa/FPSoC chip product specifications and models, achieved product line coverage of various chip specifications and supporting EDA software. The new products have met the expectations of end customers, and significant progress has been made in customer introduction. It is expected that the company's sales revenue will resume growth in the future.

Profit Forecasts, Valuations, and Ratings

Considering factors such as fluctuations in demand in the semiconductor industry, we expect the company's revenue for 2023-2025 to be 913/12.73/1651 billion yuan respectively (original value was 15.93/21.80/2,860 million yuan), corresponding growth rates of -12.36%/39.39%/29.67%, net profit of -1,00/0.20/0.65 billion yuan (original value was 1.08/195/282 million yuan), and EPS was -0.25/0.05/0.16 yuan/share, respectively. The corresponding PS is 18x/13x/10x, respectively, so it is recommended to keep an eye on it.

Risk warning:

Downstream demand fell short of expectations; market competition increased; R&D progress fell short of expectations.