The company announced its results forecast for the year 23, which is expected to achieve total revenue of 680 million yuan to 720 million yuan, a year-on-year decrease of 6.7% to 1.2%; net profit to mother will be -920 million yuan to -760 million yuan, and losses will narrow 26.5% to 39.8% year over year.

Revenue declined slightly for the full year of '23, increased year-on-year in 23Q4, and the company's growth resilience was strong. Looking at a single quarter, the company's revenue is expected to increase 15.0% to 23.6% year-on-year in 23Q4. We believe that in '23, when the company's supply chain was affected, it was reasonable for overall revenue to fluctuate slightly. The year-on-year increase in 23Q4 revenue reflects that the company still has some projects delivered, and growth is resilient. We maintain our previous judgment that the supply chain is expected to improve significantly after the second half of '24, and the company is expected to return to a high growth trajectory in the future as its supply chain improves and recovers.

R&D expenses decreased year-on-year throughout '23, and increased month-on-month in 23Q4, focusing on high-quality tracks and optimizing resource allocation. In 2023, the company's R&D expenses are expected to be 1.10 billion yuan to 1.22 billion yuan, a year-on-year decrease of 19.8% to 34.4%. Looking at a single quarter, R&D expenses for 23Q4 are expected to be 280 million yuan to 50 million yuan, an increase of 20.0% to 114.7% over the previous quarter. We judge that the month-on-month increase in R&D expenses in 23Q4 reflects the company's focus on the core circuit of AI chips with high computing power in the cloud, and that investment in new products continues. In the future, with the continuous iteration of the company's cloud chip and accelerator card products and corresponding basic system software platforms, the company's technical barriers will continue to be consolidated and strengthened.

Profit forecasting and investment advice. Revenue for 23-25 is expected to be $70/15.9/3.50 billion, respectively; EPS is expected to be -2.0/-0.6/0.6 yuan/share, respectively. Taking into account factors such as the company's industry position, competitive advantage, downstream demand prospects, and the scarcity of independent third-party platforms, and referring to comparable company valuations, we gave the company 38 times PS in 24 years, corresponding to a reasonable value of 144.94 yuan/share, maintaining a “buy” rating.

Risk warning: uncertainty about the pace of supply chain improvement; the iteration and implementation of domestic AI chip products intensifies industry competition; uncertainty about the pace of autonomous and controlled construction of the domestic AI chip industry chain. The construction of an AI computing platform software ecosystem requires long-term investment and user development, and needs to be broken through.