The company reported rapid growth in revenue, and domestic business continued to grow at a high rate, with a year-on-year increase of nearly 80%. The company continued to increase investment in R&D, continuously launch new products and enhance product competitiveness. At the same time, it acquired Xinzhilian in the first half of the year and continued to expand its business map through endogeny+extension. In the context of the wave of EDA localization and continuous industrial upgrading, the company's business is expected to continue to grow rapidly. Maintain the “increase in holdings” rating.
The company released its 2023 mid-year report: achieved operating income of 152 million yuan (YoY +38.8%), net profit of 650,000 yuan (same period last year), net profit of non-homologated net profit of 4.05 million yuan (17.14 million yuan for the same period last year); excluding the impact of current share payment expenses, net profit of 11.97 million yuan, net profit of non-return of 7.27 million yuan.
H1 revenue is growing rapidly, and domestic business continues to grow rapidly. 2023H1, the company's main business revenue was 152 million yuan, +39.1%, of which: 1) By product type, the company's EDA tool licensing business revenue was 930.6 billion yuan, +27.9%, accounting for about 61.1% of total revenue. It is the core driver of business revenue growth. The semiconductor device characteristic testing system business revenue was 46.66 million yuan, +53.4%, and the one-stop engineering service solution business revenue was 11.94 million yuan, +103.4%; 2) By region of operation, the company's domestic business achieved revenue of 92.41 million yuan Yuan, +76.1% year on year, accounts for 60.9% of the main business, a sharp increase over the previous year. Under the tide of localization, the company continues to improve its product competitiveness and domestic business is developing rapidly. We expect it to continue to drive the company's rapid growth in the future.
R&D investment has been continuously strengthened, and the EDA product layout has been further enriched. 2023H1, the company invested 90.8 million yuan in R&D, +67.6% year on year, and R&D investment accounted for 59.6% of revenue, +10.3 pcts year on year, which strongly supported the company's product research and development, and various new products progressed smoothly. In the first half of the year, the company released the advanced low-frequency noise test system 9813DXC, which supports high-precision noise testing of various semiconductor device types under various operating conditions (such as 200V high voltage, 10pA extremely low current, etc.). At the same time, it also plans to launch manufacturability design (DFM) EDA tools and digital simulation EDA tools in 2023 to promote the construction of various application-driven EDA processes. On the other hand, at the end of the company's reporting period, the number of R&D personnel reached 268, accounting for 64.9% of the total number of people, 195 with a master's degree or above, accounting for 72.8% of R&D personnel, and 25 doctorates. The reserve of high-level R&D personnel laid the foundation for improving product competitiveness.
The merger and acquisition strategy has been reduced to the next level, and the industrial ecosystem continues to grow. In April 2023, the company set up two wholly-owned subsidiaries in Shenzhen and Beijing, which is conducive to making full use of local scientific research advantages, talent advantages, customer resources and government support, while also providing better services to regional customers. In May 2023, the company announced the acquisition of 100% of the shares of Fuzhou Xinzhilian Technology Co., Ltd. Xinzhilian has many core EDA technologies such as leading automatic/semi-automatic layout, automatic/semi-automatic escape wiring, reference layout, regional wiring, and multi-line avoidance, which not only fill the gaps in the company's product design at the board level and package level, but also combine it with the company's existing advanced design and verification technology to enhance product competitiveness; in March 2023, the company took the lead in joining up with upstream and downstream enterprises to jointly build an EDA innovation consortium in the Lingang New Area of Shanghai to continuously expand the ecosystem; since 2023, the company has also continued to expand the ecosystem; since 2023, the company has also been collaborating with Hongzhiwei, Aliyun, MPI, Rotzder, etc. and many other industries Upstream and downstream companies in the chain have reached a consensus on cooperation to enhance the competitiveness of the industry. Taking multiple measures together, the company's product strength is expected to continue to improve, and the industrial ecosystem is expected to continue to grow.
Risk factors: competitive risk due to the company's low product range; risk of the company not being able to find potential acquisition or strategic investment targets and achieving business collaboration; risk that the company's R&D results do not meet expectations or R&D investment exceeds expectations; competition risk caused by the relatively limited size of the EDA market and the current market pattern.
Profit Forecast, Valuation and Rating: Maintain the company's revenue forecast for 2023-25 at $390/542/745 million, and maintain a net profit forecast of $0.54/0.71/92 billion. For reference, comparable companies Huada Nine Days and Guang Liwei (Wind unanimously expects PS52x, 21x in 2023) to have an average PS of 36 times in 2023. Considering that the company and Huada Nine-Day business are closer, the product richness still needs some time to be further improved. Giving the company 40xPS in 2023, corresponding target market value of 156 billion yuan, corresponding target price of 36 yuan, maintaining a “increase in holdings” rating.