The company released its earnings forecast for the first quarter of '24. In 24Q1, the company expects to achieve operating income of 737 million yuan, an increase of about 76% over the previous year; it is expected to achieve net profit of 210 to 240 million yuan, an increase of about 10-11 times over the previous year; it is expected to achieve net profit after deducting non-return to mother of 210-235 million yuan, an increase of about 709-793 times over the previous year.
Demand for AI servers is growing rapidly, driving demand for main products. The current round of inventory removal in the server industry is nearing its end, and it is expected that industry demand will resume growth in 24 years. The sales revenue of the company's interconnect chip product line in the first quarter was about 695 million yuan, setting a record high in sales revenue for this product line in the first quarter. The sales revenue of the Tianjin server platform product line was about 39 million yuan.
PCIe Retimer chips were successfully imported into AI servers to achieve large-scale shipment. A typical mainstream AI server with 8 GPUs requires 8 or 16 PCIe 5.0 Retimer chips, so increased AI server shipments will directly drive demand for PCIe Retimer chips. The company is one of the world's leading PCIe 5.0 Retimer chip suppliers. Its products have been gradually increased since the second half of '23, and has now successfully introduced AI server procurement projects from mainstream cloud computing/Internet vendors at home and abroad and shipped on a large scale; in the first quarter of '24, the company shipped about 150,000 PCIe Retimer chips in a single quarter, exceeding 1.5 times the annual shipment volume of this product in '23.
MRCD/MDB chips benefited from increased demand for memory bandwidth, and sales exceeded 20 million yuan for the first time in a single quarter. Thanks to the demand for higher bandwidth memory modules driven by AI and high-performance computing, memory bandwidth has become one of the main bottlenecks in improving the overall performance of current and future server systems; the MRDIMM memory module is equipped with “1 MRCD+10 MDB” chips to provide higher memory bandwidth and is highly compatible with the existing RDIMM ecosystem, and it is expected that there will be greater demand. Server high-bandwidth memory modules equipped with the company's MRCD/MDB chips have begun large-scale trials at mainstream cloud computing/Internet vendors at home and abroad. In the first quarter of '24, the company's MRCD/MDB chip sales exceeded RMB 20 million for the first time in a single quarter.
We forecast that the company's earnings per share for 24-26 will be 1.23/1.71/2.28 yuan respectively (the original forecast was 1.19 yuan and 1.58 yuan for 24-25, which mainly adjusted the main business revenue and gross profit margin). Based on the 24-year average PE of 53 times the comparable company, the corresponding target price was 65.19 yuan, maintaining the purchase rating.
Risk warning
The server industry's recovery fell short of expectations; the increase in DDR5 market share fell short of expectations; and new products fell short of expectations.