Hardware / software collaboration is expected to open up the company's growth space.

Guangliwei released three quarterly reports that in 2023, Q1-Q3 realized revenue of 256 million yuan (yoy+45.16%), net profit of 51.04 million yuan (yoy+50.63%) and non-net profit of 42.78 million yuan (yoy+68.68%).

Among them, Q3 realized revenue of 129 million yuan (yoy+30.39%,qoq+21.96%) and net profit of 28.19 million yuan (yoy-15.36%,qoq+49.88%). Considering the product grinding cycle of the company's software, the release time may be delayed to 24 years, the 23-year profit forecast will be lowered, and the 24-and 25-year profit forecast will be raised. It is estimated that the 23-25 year net profit of the company will be 1.81,3.05 and 457 million yuan (the previous value is 1.93,2.96 and 453 million yuan). Using the segment valuation method, the software business is valued at 9.85 billion yuan, corresponding to 24E 27.3x PS; other business valuation of 10.2 billion yuan, corresponding to 24E 0.71x PEG. To sum up, give the company a 24-year target market value of 20.05 billion yuan, corresponding to the target price of 100.24 yuan (the previous value of 83.52 yuan), "buy".

The management and control of sales / administrative expenses has been strengthened, and the R & D investment has been continuously increased.

The sales / management / R & D expense rates of 23Q3 are 8.0%, 6.4% and 41.1%, respectively, and the year-on-year change is-1.8/-2.4/9.3pct. The sales / management expense rate of 23Q3 decreased compared with the same period last year, which is expected to be mainly due to the strengthening of cost control by the company, and the scale effect appears as the company's revenue increases; the rate of 23Q3 R & D expenses increases year-on-year, mainly due to the company's continued efforts to strengthen product research and development, and the increase in the number of R & D personnel. 23Q3 achieved a gross profit margin of 58.7%, down 6.91pct from the same period last year. It is expected that the business income of the WAT testing machine with low gross profit margin is growing rapidly, and the operating cost is up 66.9% from the same period last year.

According to the company's website, on July 2, 2023, the company launched T4000 series of new generation general-purpose high-performance semiconductor parameter testing equipment, which is mainly used for yield testing of 8-inch and below wafer production lines. We believe that with the promotion of the company's new generation of testing machine products, revenue is expected to accelerate the release. As of September 30, 2023, the company's inventory increased by 140.85% compared with January 1, 2023, mainly due to increased stock preparation of test machine components, or side verification of the company's high growth expectations for the test machine business. We believe that with the continuous deepening of the company's full-process business layout, the volume of hardware business may bring drainage effect, with the cooperation of software and hardware, the company's yield testing business is expected to continue to grow high.

Continue to improve the EDA industrial layout, epitaxial mergers and acquisitions are expected to expand the market space, on September 26, 2023, the company issued the "Hangzhou Guangli Microelectronics Co., Ltd.'s announcement that the company intends to purchase 43% of the shares in Shanghai Yiruixin Electronic Technology Co., Ltd." after the completion of this investment, the company controls a total of 62% of Yiruixin through direct and indirect means, and Yiruixin becomes a holding subsidiary of the company. Ericsson specializes in integrated circuit design for testability (DFT) technical services and product development, and has a perfect chip DFT automation design process. We believe that following the launch of CMPEXP tools in the first half of the year to enter the field of manufacturability design (DFM), holding Erica will help the company to further improve the EDA product matrix and open up more market customers such as Fabless.

Risk hint: downstream prosperity is not as expected; market competition intensifies.