Goren Electronics is a world-renowned EDA company. It specializes in manufacturing and design EDA, semiconductor device characteristic testing instruments, and semiconductor engineering services. Related products have been widely used by the world's leading foundries and memory manufacturers. Goren Electronics published the 2023 semi-annual report. Combined with the announcement information, the comments are as follows:

The company's 23H1 revenue was in line with expectations, and growth was mainly driven by test systems and engineering services. 23H1's revenue was 152 million yuan, +39.07%, of which EDA software licensing business revenue was 9.3.4 million yuan, +27.89% year on year, semiconductor device characteristic testing system revenue of 46.66 million yuan, +53.42%, one-stop engineering service solution revenue was 11.94 million yuan, +103.39% year on year. Revenue growth mainly depended on testing systems and engineering services. 23Q2 revenue was 88 million yuan, +25.62% YoY/+38.34% YoY.

23H1's net profit was 648,700 yuan, net profit loss of 4,046,500 yuan after deducting non-attributable net profit loss, and 11.97 million yuan after excluding the impact of share payments, or -34.64%.

23H1 gross margin declined slightly year-on-year, mainly due to changes in the company's product structure. The company's 23H1 gross margin was 84.18%, year-on-year -3.17pcts, 23Q2 gross profit margin 79.8%, year-over-year -4.8 pcts/month-on-month -10.42pcts. The decline in gross margin was mainly affected by changes in the company's product structure. 23H1's EDA business/test systems/engineering services accounted for 61.36%/30.77%/7.87%, and the EDA business accounted for -5.37pcts. The EDA business gross margin was 100%, so the 23H1 gross margin change was affected by the test system and The impact of the overall increase in the share of engineering services.

DFM and digital simulation EDA tools are expected to be launched within the year, and the acquisition of Xinzhilian will improve the layout of board-level and package-level tools. The company invested 190 million yuan in R&D of 23H1, +67.63% over the same period. In the first half of the year, it released 9831DXC, an advanced low-frequency noise test system with complete functions, which supports high-precision noise testing of various device types under various working conditions. The company plans to launch two new products on the market this year: EDA tools for manufacturability design (DFM) and digital simulation EDA tools. Company 23M5 acquired 100% of the shares of Fuzhou Xinzhilian Xinzhilian. Xinzhilian has many EDA technologies such as leading automatic/semi-automatic layout, automatic/semi-automatic escape wiring, reference layout, regional wiring, and multi-line avoidance, which can expand the company's leading position in chip-level EDA to board-level and package-level design.

Investment advice. Goren Electronics is a leading domestic EDA manufacturer. It has deep accumulation in the fields of device modeling and circuit simulation and verification. Considering the impact of semiconductor industry cycle fluctuations on the company, we adjusted the company's revenue forecast for 23-25 to 372/487/622 million yuan. Considering that 23-25 stock payment expenses were 0.42/0.31/017 billion yuan, apparent net profit was 0.11/0.36/066 million yuan, corresponding EPS of 0.02/0.08/0.15 yuan, maintaining the “increase in holdings” rating.

Risk warning: risk of technology iteration, risk of R&D failure, risk of increased market competition, risk of reduced product competitiveness, macro-environmental risk, risk of intellectual property infringement.