Incidents:

The company held the 45th (Provisional) Meeting of the 5th Board of Directors on January 4, 2023 to review and pass the “Proposal on Election of the Chairman of the Company”. The board of directors agreed to elect Lui Chi-wing as the chairman of the 5th board of directors and the convener of the Strategy Committee. The term of office will begin on the date of review and approval of the current board of directors until the end of the term of the 5th board of directors, and also appointed Mr. Lui Chi-wing to act as general manager.

reviews

Short-term management disturbances. On the evening of November 29, 2023, Lanco Technology issued the “Notice of Resolutions of the First Extraordinary General Meeting of Shareholders in 2023", stating that on November 19, the company received the “Proposal on the Removal of Director Zhou Fuchi” delivered by Zhu Pingbo, a shareholder holding 3% or more of the shares, and the bill was submitted to the current shareholders' meeting for consideration. Meanwhile, on December 4, the company held the 45th (temporary) meeting of the 5th board of directors to review and pass the “Proposal on Election of the Chairman of the Company”. The board of directors agreed to elect Lui Chi-wing as the chairman of the 5th board of directors and the convener of the Strategy Committee. The term of office will begin on the date of review and approval of the current board of directors until the end of the term of the 5th board of directors, and also appointed Mr. Lui Chi-wing to act as general manager.

Deeply cultivate the storage industry and continue to promote product iteration. The company is the inventor of flash drives. Currently, its products cover the fields of SSD solid state drives, DRAM memory sticks, embedded storage and mobile storage. Adhering to the model of “quality products as the lead, brand promotion increases momentum, and sales channels seize acceptance”, the company continues to concentrate superior resources to create high-precision categories of solid-state drives and memory stick products, and focus on promoting the technical upgrading of storage products and enhancing the overall competitiveness of brands and products.

Actively lay out upstream and downstream to open up room for growth. In terms of downstream AI computing, the company signed a “Strategic Cooperation Framework Agreement” with Shanxi Computing to give full play to the market advantages of the two sides in the storage and AI computing industry, seize the opportunities of digital China construction, and participate deeply in the construction of the Shaoguan National Intelligent Computing Center. At the same time, it also established a joint venture with Beijing Computing Core. The joint venture is mainly engaged in the development and production of computing power products (AI intelligent computing equipment) and overall solutions. In terms of upstream packaging and testing, a joint venture was established with Zhengyuanxin to cooperate in the construction of a memory chip packaging and testing factory, which will help the company to deepen upstream expansion and cooperation in the industrial chain, improve the layout of the storage product industry chain, and prepare for entering a more high-precision market.

Profit forecast: Optimistic about the company's diversified layout in the storage industry, it is expected to benefit from the construction of the Shaoguan data center industry cluster in the future. We expect the company to achieve net profit of 0.33/105/152 million yuan in 2023-2025, corresponding PE of 210/ 67/ 46 times. The 2024 profit was estimated at 70 times PE, and the target price was 36.7 yuan. It was covered for the first time, and a “gain” rating was given.

Risk warning: Downstream demand falls short of expectations, profit forecasts and valuation judgments fall short of expectations.