经营业绩短期波动，盈利能力环比改善。受行业下行周期影响，公司经营业绩短期承压，但随着头部厂商控产效果逐步显现，市场供需平衡迎来改善，公司业绩出现环比改善势头，23Q3 单季度公司实现营收28.72 亿元，同比+66.62%，环比+29%，归母净利润亏损2.87 亿元，亏损环比收窄，毛利率环比+4.41pct 至4.94%。考虑到当前存储晶圆有望延续涨价趋势，且价格向下传导顺利，预计公司盈利能力将进一步得到改善。Ping An's point of view:
The effect of production reduction on the supply side is evident, and the signal at the bottom of the storage cycle is clear. As leading storage manufacturers have adopted measures such as active production cuts, current market supply and demand have gradually improved, and prices of storage products have shown an upward trend. According to TrendForce data, the average price of DRAM contracts in the single quarter of 23Q4 is expected to be +3-8% month-on-month, and the average price of NAND Flas H product contracts is +8-13% month-on-month. We believe that the current storage industry is at the bottom of the cycle. Driven by downstream inventories returning to normal and AI technology, storage demand is expected to gradually recover. Storage module manufacturers, as downstream in the industry chain, are expected to benefit first from this cycle reversal.
Leading domestic storage module manufacturer, dual brand strategy helps increase market share. As a leading domestic storage module manufacturer, Jiang Bolong has the industry storage brand FORESEE and the international high-end consumer storage brand Lexar. Related products are widely used in consumer electronics, industrial control, automotive electronics and other fields. With its core competitiveness such as leading firmware algorithm development, memory chip testing, and integrated package design, the company's industry position and market influence continue to improve. Among them, the company's eMMC & UFS market share ranked sixth in the world in 2022, Lexar brand memory card/flash drives ranked second/third in the global market in 2021, respectively, and SSD modules ranked third in the global private brand channel market shipment volume in 2022.
Business performance fluctuated in the short term, and profitability improved month-on-month. Affected by the industry's downturn cycle, the company's operating performance was under pressure in the short term, but as the production control effects of leading manufacturers gradually became apparent, the balance between supply and demand in the market improved, and the company's performance showed a month-on-month improvement trend. In the 23Q3 quarter, the company achieved revenue of 2,872 billion yuan, +66.62% year-on-year, +29% month-on-month, and net profit loss of 287 million yuan. Losses narrowed month-on-month, and gross margin of +4.41pct to 4.94% month-on-month. Considering that the current trend of increasing prices for storage wafers is expected to continue, and that prices are smoothly transmitted downward, it is expected that the company's profitability will be further improved.
Countercyclically invest in mergers and acquisitions of sealing and testing plants to improve the industrial chain layout vertically. In October 2023, the company completed 70% of Suzhou Licheng's equity acquisition, and the company's memory chip packaging testing capabilities were further enhanced. In November of the same year, the company also completed the acquisition of 81% of the shares of SMART Brazil, a leading Brazilian memory manufacturer, and its wholly-owned subsidiaries; in addition, the company's two self-developed master control chips have completed streaming verification and are expected to be put into mass production at 23H2. At present, the company has completed effective coverage of the containment+main control process, the industrial chain layout has been continuously extended and improved, and core competitiveness and market influence have been continuously strengthened. It is expected that while improving the profitability of the company's products, it is expected that the company's leading position in the market will be further consolidated.
Investment suggestion: The effects of the production reduction measures of leading storage manufacturers at the end of the industry are gradually showing. By observing the recent performance of leading storage manufacturers, inventory changes, and the price trend of major storage products in DRAM/NandFlas H, we believe that the signal at the bottom of the current storage cycle is clear. As storage product prices gradually stabilize, relevant storage industry chain enterprises will usher in an inflection point in performance improvement. As a leading storage module manufacturer in China, the company's market share is expected to further increase due to the product competitiveness and forward-looking layout of eMMC & UFS and Lexar's brand influence in the high-end consumer market. In addition, the company's enterprise-level storage business is expanding smoothly. eSSD and RDIMM products have been certified by important customers such as Lenovo, JD Cloud, and BiliBili, and have achieved mass production and shipment of some orders. In the long run, we are optimistic about the vast domestic replacement space brought about by the demand for innovation, and the company is expected to benefit fully. The company's 2023-2025 EPS is expected to be -2 yuan/0.9 yuan/1.45 yuan respectively. Considering that the company's net profit may fluctuate greatly, PS is used for valuation. The PS valuation corresponding to the closing price on December 4, 2023 is 4.2X/3.3X/2.8X, respectively, covering the “recommended” rating for the first time.
Risk warning: (1) Downstream demand recovery falls short of expectations: The macroeconomic economy is currently in a downward cycle, and downstream demand is relatively weak. If subsequent demand recovers less quickly than expected, it will affect sales of the company's related products; (2) The risk of fluctuations in storage wafer prices: storage wafers are the main cost of the company's storage products. If the price of subsequent storage wafers falls, it may adversely affect the company's business performance and profitability; (3) New product development progress falls short of expectations: Currently, the company's main control chip, vehicle storage and other new products are in the early stages of subsequent development, if the new products are in the early stages of development Product development or promotion is not progressing as well It is expected that it will not be possible to effectively support the company's performance.
Today, after hitting the high near 24,000 in the early session and entering bearish positions, the index fell sharply by nearly over 600 points, immediately recouping yesterday's losses significantly.
Moreover, today it broke the new high again, reaching a maximum of 24,076, but by the end of the market, it fell back by about 70 points, producing a bearish candle. The current trend has not yet been broken, but from the previous low until now, it has risen close to 6,000 points. It is believed that those with positions can continue to hold until there is a clear trend reversal for profit-taking. Those without positions can wait for a pullback to get in. Actually, it is hoped for a quick pullback, as it allows for entry and also provides a healthy breath.
Currently, the outlook remains the same as before. It is believed that even if there is a pullback, it shouldn't be too deep. However, if Futures fail to stabilize and close below 22,350, there may still be room for decline. The chance of Futures falling below 21,400 in the short term should be low, so it is considered that if a significant pullback occurs, it presents a good opportunity to incrementally go long. Recently, there has been a consistent approach to not hold positions overnight, only focusing on immediate trades, as there is no high chasing and no casual short selling.
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