Event: On October 24, Guangli Micro released its 2023 three-quarter report. In the first three quarters of 2023, the company achieved revenue of 256 million yuan, an increase of 45.16% over the previous year; realized net profit of 51 million yuan, an increase of 50.63% over the previous year; and realized net profit after deduction of 43 million yuan, an increase of 68.68% over the previous year. Among them, in the Q3 quarter, the company achieved revenue of 129 million yuan, a year-on-year increase of 30.39%, a year-on-year increase of 21.96%; realized net profit of 28 million yuan, a year-on-year decrease of 15.35%, a year-on-year increase of 49.88%; and realized a net profit of 27 million yuan, a year-on-year decrease of 18.34%, and a year-on-month increase of 53.89%.

Performance is improving steadily, and investment in R&D continues to increase. The company achieved revenue of 129 million yuan in Q3 in a single quarter, an increase of 30.39% over the previous year. It mainly benefited from the acceleration of domestic substitution and the expansion of downstream fab production capacity. The pace of hardware equipment delivery fluctuated, and delivery of some orders was delayed until Q4. Q3 achieved net profit of 28 million yuan in a single quarter, a year-on-year decrease of 15.35%, an increase of 49.88% over the previous year. The year-on-year decline in the company's net profit was mainly due to the rapid increase in R&D expenses. Since 2023, the company has increased R&D investment. Since 2023, the company has increased R&D investment. Q3 has quarterly R&D expenses of 53 million yuan, an increase of 68.38% over the previous year. Q3 The company's gross margin for the single quarter was 58.70%, an increase of 1.83pct over the previous quarter, and the company's profitability grew steadily.

Further improve the layout of the EDA field, and the supporting application of data analysis software. The company launched a number of new products in 2023, and announced on September 25 that it would acquire 43% of Yiruixin's shares. The EDA software business officially entered the DFT field, forming a strong synergy and complementarity effect. At the same time, through endogenous research and development, the company has launched a new advanced mass production electrical monitoring program (AdV-PCM), which can effectively monitor production line yield and ensure high-quality mass production. In addition, the DATAEXP series of software launched by the company can support one-stop and efficient analysis and management of data in the semiconductor process, and the data analysis software has entered the release period. The company uses unique chip design, data analysis, and quality control solutions to conduct differentiated competition, opening up the growth ceiling, and EDA market share is expected to increase further.

Orders for test equipment are plentiful, and sales are expected to reach new highs. The company broke the monopoly of foreign manufacturers in the field of WAT testing machines and surpassed many important customers in 2023. The company's main products are T4000 series and T4100S series test equipment. Among them, the T4100S series can increase test efficiency by 1.4 to 5 times and have excellent product performance on the premise of meeting mass production WAT testing requirements; in the first half of 2023, a new generation of T4000 models was launched, mainly targeting 8-inch wafer production lines, which can meet the testing requirements of various products such as LOGIC, CIS, DRAM, SRAM, FLASH, BCD, etc., and WLR functions have been expanded on the T4000 basis.

Benefiting from the expansion of production capacity in downstream fabs and the trend of domestic production substitution, the company has full orders for WAT test equipment, and performance is expected to maintain rapid growth.

Investment suggestions: We maintain the company's 23/24/25 net profit forecast of 2.02/3.12/485 million yuan, respectively, and 86/56/36 times the corresponding current price of PE. The company has obvious technical advantages in the field of yield EDA tools and WAT. As downstream fab production capacity expands and EDA domestic substitution progresses steadily, downstream market demand is expected to continue to expand, and subsequent performance is expected to maintain relatively rapid growth and maintain the “recommended” rating.

Risk warning: risk of technology development not progressing as expected; risk of increased industry competition; risk of downstream demand recovery falling short of expectations.