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德明利(001309):自研主控与产品线扩展打开成长空间

Demingley (001309): Self-developed master control and product line expansion open up room for growth

國信證券 ·  Nov 12, 2023 00:00

The company's 3Q23 revenue increased 29.48% month-on-month, and net profit after deducting non-return to parent increased 13.29% month-on-month. Company 1-3Q23 achieved revenue of 976 million yuan (YoY +17.0%), net profit of 111 million yuan (YoY -290%), net profit of 119 million yuan (YoY -350%), net profit of 119 million yuan (YoY -350%), and gross profit margin of 3.64% (YOY-16.02pct). As storage prices entered an upward channel, the company's revenue continued to improve month-on-month. The 3Q23 single quarter revenue was 385 million yuan (YoY +29.48%, QoQ +33.7%), net profit of 32 million yuan (YoY -321%, QoQ +10.82%), net profit after deducting non-net profit of 334 million yuan (YoY -444.76%, QoQ +13.29%), gross margin improved markedly.

Prices have picked up due to production cuts in the original factory, and module manufacturers with stable wafer procurement resources have benefited. According to CFM price data, storage spot prices represented by Flash Wafer continued to rise from July to October, and the supply side was greatly optimized under the influence of active production cuts by the original manufacturer. Taking Samsung as an example, the revenue of the 3Q storage business increased 17% month-on-month. Driven by the expansion of the proportion of advanced node products such as HBM, DDR5, LPDDR5x, and UFS 4.0 and production cuts, it is expected that storage prices will continue to rise in the fourth quarter, and some granular supply will shrink further.

Against this background, the company's 3Q23 revenue increased month-on-month. Adequate inventory can provide customers with stable supply guarantees. While improving profitability in the short term, it can also establish good long-term customer relationships.

The product structure focuses on the storage circuit, and master control and firmware development capabilities build product competitiveness. The company set up a joint venture (10% investment ratio) and sold touch assets to the joint venture. Its main business focused on the storage sector, forming three product lines: mobile storage, solid-state drives, embedded and industrial storage. The company reduces memory costs through self-developed master control chips, and at the same time brings product solutions closer to application requirements. Previously, the company's main control chips mainly covered mobile storage. With the expansion of product categories, the main control chips were developed simultaneously: Currently, the company's SD6.0 memory card main control chip and the first SATASSD master control chip have entered the feedback verification stage. In the future, they will develop their own PCIeSD main control chips to explore PC OEM, servers, data centers and other fields.

1-3Q23 R&D investment increased by 54.5% year-on-year, promoting enterprise-grade and sector-specific customized storage products.

The company quickly entered the industry customer market through the UDStore industry storage product line, and has now successfully developed customized and advanced enterprise-grade storage products in segmented fields. Solid-state drive PCIe Gen4X4 M.2 commercial-grade products have been shipped. eMMC fully lays out vehicle specifications, specifications, high durability and commercial products, and the UFS3.1 product line for high-speed, high-capacity applications already has mass production capacity. In the future, demand for mobile phones, PCs, servers, and data centers will pick up, which will help solid-state drive sales and embedded product customer introduction to advance rapidly.

Investment suggestions: We are optimistic about the growth space brought about by the company's main control chip design capabilities and product line expansion. It is estimated that the company's net profit from 23-25 will be -0.60/1.23/201 million yuan respectively, corresponding to 24-25 PE 73/47 times, respectively, giving it an “increase in holdings” rating.

Risk warning: Consumer electronics demand falls short of expectations, and product customer expansion falls short of expectations.

The translation is provided by third-party software.


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