Q3 revenue continues to be under pressure, waiting for Xinchuang market to warm up
Jingjiawei released the third quarterly report. In Q1-Q3 of 2023, it realized revenue of 469 million yuan (yoy-35.66%), net profit of 15.58 million yuan (yoy-91.00%), and net profit of deduction of non-profit-3241 (yoy-123.86%). Among them, Q3 realized revenue of 124 million yuan (yoy-33.06%, qoq-55.66%) and net profit of 23.24 million yuan (yoy-51.98%, qoq-63.12%). 23Q3 Company's revenue declined year-on-year. It is estimated that due to the impact of macro environment and the delay of procurement rhythm of downstream customers, the profit forecast is lowered. It is estimated that the net profit of the Company from 23 to 25 will be CNY 256 million, CNY 357 million and CNY 472 million (previous value CNY 355 million, CNY 491 million and CNY 629 million).
At the same time, taking into account the timing of revenue expansion or delay to 2025, the 2025 results are used as the valuation basis. By adopting the segment valuation method, GPU business is given 25E 23.0x PS, corresponding valuation is 32.669 billion yuan; other businesses are 25E 18.8x PE, corresponding valuation is 10.45 billion yuan. To sum up, the target market value of the company is 43.12 billion yuan, corresponding to the target price of 94.27 yuan (previous value 82.66 yuan),"buy".
R & D investment continues to increase, product strength upgrade can be expected
23Q3 Company sales/management/R & D expense ratio was 5.5%/24.5%/58.6% respectively, year-on-year change-1.3/9.0/15.3pct, month-on-month change-2.0/12.9/26.1pct. 23Q3 R & D expenses decreased by 9.41% year-on-year, but R & D expense ratio increased year-on-year, mainly because the company still maintained relatively high R & D investment under the background of fluctuation of industrial demand and decline of revenue. We believe that under intensive research and development, the company's GPU product power is expected to continue to iteratively upgrade, or will drive long-term steady growth of the company's revenue.
Continue to polish GPU product power, wait for Xinchuang market to warm up
We believe that the current domestic substitution is spreading from the party and government to other industries, and demand is expected to accelerate the release. According to the company's official website, on September 22, 2023, the "Advanced Computing" joint laboratory jointly established by the company and Changsha Institute of Computing and Digital Economics of Peking University was officially inaugurated, dedicated to the research and development of efficient basic software such as high-performance basic computing libraries, and promoting the ecological construction of domestic independent controllable computing. According to the semi-annual report of 2023, the JM9 series graphics processing chips of the company have gradually realized pilot applications in government affairs, telecommunications, electric power, energy, finance, rail transit and other fields. We believe that with the continuous upgrading of GPU product power and the gradual warming of macro environment, Xinchuang market promotion is expected to accelerate, and GPU business revenue growth may be ushered in 24-25 years.
Self-research/merger and acquisition, general computing ecological expansion can be expected
On April 25, 2023, the Company issued the Announcement on Proposed Participation in the Establishment of Industrial Investment Funds and Related Party Transactions, proposing to subscribe no more than RMB 200 million to participate in the establishment of venture capital funds, focusing on exploring investment opportunities such as high-end chips for industrial control, vehicle regulation and special markets. On July 24,2023, the Company issued the Prospectus for Issuing A Shares to Specific Objects in 2023, which plans to raise no more than RMB 3.974 billion yuan for the R & D and industrialization projects of high-performance general GPU chips and the construction projects of general GPU advanced architecture R & D center. We believe that the company continues to expand its GPU product line through a series of methods such as self-research/mergers and acquisitions, and is expected to enter more fields such as general computing in the future to enhance market space.
Risk hint: the cost of chip raw materials continues to rise, and the downstream boom is less than expected.