Incidents:

On March 5, Guang Liwei issued the “Notice on Promoting the “Double Improvement of Quality and Return”: The company will focus on its main business and strive to become the world's leading supplier of integrated circuit EDA software and wafer-level electrical testing equipment; adhere to innovation-driven development, and continue to enhance the company's core competitiveness by continuously increasing investment in R&D to guarantee the company's advanced product and technological advantages; continue to improve the corporate governance system, raise the level of standardized operation, and enhance the company's core competitiveness, profitability and comprehensive risk management capabilities; focus on reasonable return on investment for investors; strengthen investors Communication and other measures continue to improve the company's management level, and continuously improve the company's core competitiveness, profitability and comprehensive risk management capabilities, with a view to achieving significant development and actively giving back to investors.

Investment highlights:

An expert enterprise in the field of improving the yield of scarce integrated circuits in China merged and acquired YiRuixin to expand the DFT business. Guang Liwei was founded in 2003. The company focuses on the field of yield improvement in integrated circuit production, and has built three main business lines: EDA software tool licensing and service, WAT testing machine R&D, manufacturing and sales, and yield improvement technical services. It provides a full-process solution combining software and hardware for fab test chip design, electrical performance testing, rapid test chip testing, and post-test data analysis. At present, the company's yield software and solution products have been successfully used in mainstream foundry and IDM manufacturers such as Samsung Electronics, Huahong Group, Changxin Storage, Yuexin Semiconductor, and Hefei Jinghe. In the first half of 2023, the company's revenue and net profit to mother reached 127 million yuan and 0.2 billion yuan respectively, with year-on-year increases of 63.91% and 3903.60% respectively. The company achieved control of Eruixin in 2023, controlling a total of 62% of Eruixin's shares through direct and indirect methods. It focuses on integrated circuit measurability design (DFT) technical services and product development, and has a complete automated chip DFT design process. Yiruixin's DFT solution and the company's yield improvement system can form synergy and complement each other. By opening up the data link, the company's overall yield solution can be completed and perfected. By integrating our EDA business with DFT technology into products and ecosystems, it is expected to accelerate customer introduction, expand the customer footprint, and achieve rapid growth in new business revenue.

The EDA software business continues to diversify, and the performance of WAT testing machines is comparable to overseas leaders.

In terms of EDA business, according to Semi estimates, the global electronic system design (ESD) market has continued to grow over the past 25 years, and the global ESD market reached 14.9 billion US dollars in 2022. Starting from the field of test chip design in the chip development process, the company has successively developed various EDA design tools such as SMTCell, TCMagic, ATCompiler, IC Spider, and DenseArray, which can improve test chip design efficiency and shorten the design cycle. At present, the company has developed the DataExp big data platform, which includes general semiconductor data analysis, WAT data analysis, semiconductor yield management and analysis, defect data management and analysis, and equipment monitoring and forecasting systems. By summarizing, cleaning, analyzing, and insight into the connected data stream, the company empowers the entire process of the fab factory business flow from product design and development, R&D to mass production, and continuous stable mass production and expansion, improving and improving yield throughout the life cycle of a fab. In terms of the WAT testing machine business, the company's WAT testing machine business has been in place for many years. Currently, the core parameters of the company's T4000 and T4100s high-speed WAT test equipment are comparable to products related to WAT testing machine leader Keysight. Through independent research and development, the company has completed the linkage between high-efficiency test chip EDA tools, addressable circuit IP, WAT electrical test equipment and big data analysis products, forming a closed loop of software and hardware products and services to help customers improve yield at a lower cost and faster speed, creating more for customers value, thereby increasing customer stickiness.

The “Double Improvement of Quality and Return” action plan shows determination, and insists that independent innovation companies can look forward to the future. The company issued the “Notice on Promoting the Action Plan for Double Improvement of Quality and Return”, which highlights the confidence that the company continues to carry out independent, autonomous, innovative research and development, and continue to enhance the company's core competitiveness; at the same time, it also shows the company's determination to continuously improve corporate governance, strengthen standardized operations, and attach great importance to shareholders' interests. We believe that as a scarce integrated circuit yield improvement enterprise in China, the company has a perfect layout in terms of R&D EDA software, electrical testing hardware, mass production data analysis software, and yield improvement services, and also has a high level of business systemicity, which can fully meet customer demand for yield improvement. Today, with the continuous development of domestic semiconductors and steady mass production of advanced manufacturing processes, the company's performance is expected to continue to be released.

Profit forecast and investment rating: With the company's continuous promotion of DFT service and software licensing, data analysis platform, service growth, and WAT testing machine business, we expect the company's operating revenue in 2023, 2024, and 2025 to be 492 million yuan, 771 million yuan, and 1,261 billion yuan respectively, with net profit to mother of 135 million yuan, 253 million yuan, and 500 million yuan respectively. The market value on March 4, 2024 is 12.8 billion yuan, corresponding PE is 95.12x. 50.56x and 25.62x. As an expert enterprise in the field of integrated circuit yield improvement scarce in China, we believe that in the face of rapid development of advanced integrated circuit processes in mainland China, urgent demand for supply chain localization, and increasing demand for yield improvement, the company is expected to achieve rapid development, coverage for the first time, and give it a “buy” rating.

Risk warning: 1) Risk of downstream customer demand falling short of expectations; 2) risk of product promotion falling short of expectations; 3) risk of product verification falling short of expectations; 4) risk of new product development falling short of expectations; 5) risk of deteriorating competitive landscape, etc.