occurrences

The company released the “Report for the Third Quarter of 2023” after closing on October 27, 2023.

Comment:

Operating income grew rapidly, equity incentives enhanced the company's long-term competitiveness. In the first three quarters of 2023, the company achieved operating income of 222 million yuan, an increase of 30.05% over the previous year; realized net profit of -286.766 million yuan, a year-on-year decrease of 193.88%; net profit excluding the impact of share payments was -8.6599 million yuan, a year-on-year decrease of 128.35%. In the third quarter of 2023, the company achieved operating income of 70 million yuan, an increase of 14.29% over the previous year, and realized net profit of 29.3253 million yuan, a year-on-year decrease of 339.65%. In order to motivate the existing R&D team and attract high-end talents to join and enhance the company's long-term competitiveness, the company implemented the 2023 restricted stock incentive plan in February 2023. According to the grant price of 18.41 yuan/share, it granted 6.9408 million restricted shares for the first time to 177 domestic and foreign employees.

Continue to increase investment in R&D and promote the construction of the entire EDA process

In the first three quarters of 2023, the company's R&D investment reached 150 million yuan, an increase of 73.64% over the previous year. The proportion of R&D investment in revenue was 67.47%, an increase of 16.94 percentage points over the same period last year. In the first half of the year, the company released the advanced low frequency noise test system 9813DXC with complete functions, 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.). The company plans to launch two new products on the market within this year, namely EDA tools for manufacturable design (DFM) and digital simulation EDA tools. In addition, the company is also actively developing other core technologies and accelerating the development process of various new products to promote the development of various application-driven EDA processes.

Wholly-owned acquisition of XinZhilian, and the industrial layout continues to expand

In May 2023, the company acquired 100% of the shares of XinZhilian. Xinzhilian has leading automatic/semi-automatic layout, automatic/semi-automatic escape wiring, reference layout, regional wiring, multi-wire avoidance, etc., which can expand the company's leading position in chip-level EDA design and verification to board level and package level design, which will further enhance the market competitiveness of the company's products and form a complete chip-level, board-level and package design full-process solution, which is of great significance in further enriching the company's EDA ecosystem. The company has formed an industrial layout with Shanghai, China as its headquarters, covering Shanghai, Beijing, Jinan, Guangzhou, Shenzhen, and Fuzhou, and overseas covering key integrated circuit regions such as the United States, South Korea, and Singapore. Subsequent companies will continue to deepen their global market layout according to business development and strategic expansion needs.

Profit forecasting and investment advice

The company is an EDA enterprise with competitiveness in the international market. It has leading EDA key core technology, plenty of momentum for continuous growth, and broad room for future growth. It is predicted that the company's operating income for 2023-2025 will be 395, 5.49, and 746 million yuan, net profit of 0.56, 0.75, 102 million yuan, and EPS of 0.13, 0.17, and 0.24 yuan/share. Maintain a “buy” rating considering the prosperity of the industry and the company's future growth.

Risk Alerts

Iterative risk of technological upgrading; risk of R&D results not meeting expectations or R&D investment exceeding expectations; risk of failure to sell on a large scale due to R&D results not being recognized by the market; risk of loss of technical personnel and rising technical personnel costs; competitive risk of low product variety; risk of impairment of goodwill.