The company released its semi-annual report in 2023, with revenue of 345 million yuan in the first half of the year, a decrease of 36.55% over the same period last year, a net profit of-7.6616 million yuan, a decrease of 106.14% over the same period last year, and a net profit of-25.8628 million yuan, a decrease of 124.05% over the same period last year.

Comments:

The income side is under pressure, and the cost input keeps growing. In the first half of 2023, the company achieved operating revenue of 345 million, a decrease of 36.55% compared with the same period last year, mainly due to a decrease in revenue from chip products and graphics display and control products. In terms of products, the operating income of graphics display and control products was 211 million yuan, down 19.52% from the same period last year; the operating income of chip products was 43.3884 million yuan, down 79.21% from the same period last year; and the operating income of small specialized radar products was 76.2028 million yuan, an increase of 16.31% over the same period last year. On the gross margin side, the gross margin for the first half of the year was 62.29%, which fluctuated slightly compared with 62.61% in the same period last year. On the expense side, the company generated sales expenses of 31.722 million yuan in the first half of the year, an increase of 42.69% over the same period last year, mainly due to an increase in market expansion activities; management expenses of 58.1321 million yuan, an increase of 4.55% over the same period last year; R & D investment of 166 million yuan, an increase of 23.77% over the same period last year; financial expenses-1.991 million yuan, an increase of 73.72% over the same period last year, mainly due to a decrease in bank interest compared with the same period last year.

Straighten out the technology and product layout and cut into a broader downstream field. On the management side, in the first half of the year, on the one hand, the company continues to increase R & D investment and plans to implement the project of issuing shares to specific targets; on the other hand, it carries out internal management reform and carries out technology and product layout according to the company's medium-and long-term strategic planning. On the product side, the company's graphics display and control products are divided into graphic display and control module products and reinforcement products, which are mainly used in the special market and will continue to develop applications in the general market in the future. The company's small specialized radar products gradually realize the development strategy of changing from module-level products to system-level products, and continue to improve the company's profitability and sustainable development ability. The company's JM9 series graphics processing chips have gradually realized pilot applications in government affairs, telecommunications, electric power, energy, finance, rail transit and other fields.

"people's research and production" + "organizational services" are promoted in a balanced manner, and the "five-in-one" continues to strengthen the core competitiveness. The company continues to strengthen its core competitiveness from five aspects: in terms of talents, while introducing talents and establishing an effective management system, the company timely implements equity incentives; in terms of technology, in order to promote the company's R & D and technological progress, the company has established a sound intellectual property protection system; in terms of products, since its inception, the company has adhered to the implementation of rolling product development strategy, with a profound accumulation of R & D strength. In terms of service, customers have high requirements for time node control, rapid response ability and product quality assurance, so the company focuses on the main business, works carefully, and is committed to providing all-round integrated services before and after sale; in terms of organization, through the adjustment of organizational structure, the company improves the efficiency of R & D management, optimizes the allocation of resources, and provides a strong guarantee for the sustainable and long-term development of the company.

Investment advice: Xinchuang does not meet expectations and reduces its profit forecast. We estimate that the operating income for 2023-2025 will be 1405max, 19.32,2585 million yuan, corresponding to a growth rate of 21.8%, 37.5%, 33.8%, and its net profit will be 3.52%, 503, 677 million yuan, corresponding to a growth rate of 21.7%, 43.1%, 34.5% (before 2023-24, 4.94 / 695 million yuan). The corresponding EPS (dilution) is 0.77,1.10,1.48 yuan respectively. In terms of valuation, considering that the company is a chip designer, expanding from the military to the civilian market, although there are differences in the field of application, but the business essence is the same, both are in a period of rapid expansion, using PS for valuation. Select the domestic AI chip leading manufacturers Cambrian, CPU leading manufacturer Godson as a comparable company, considering the company for the domestic GPU leading enterprises, high scarcity, in the letter to promote the hope to benefit, we give 2023 corresponding 30xPS, corresponding to the market value of 42.15 billion, corresponding to the target price of 92.23 yuan. Maintain the "push" rating.

Risk tips: the landing of Xinchuang policy is not as expected; the competition in the industry is intensified; product research and development, adaptation is not as expected.