Core views:
The company released its 2024 quarterly report, with operating income of 737 million yuan, YoY +75.74%; net profit to mother of 223 million yuan, YoY +1032.86%; net profit without return to mother 220 million yuan, YoY +74117.63%. Demand for 24Q1 memory interface chips resumed growth, and some of the company's new products (such as PCIe Retimer, MRCD/MDB chips) began large-scale shipments. By business, the 24Q1 interconnect chip product line had revenue of 695 million yuan, YoY +68.38%, setting a record high in the Q1 sales revenue record for this product line; The revenue of the server platform product line was 39 million yuan, YoY +614.61%. Due to the increase in revenue share of high-margin products such as DDR5 memory interface chips, PCIe Retimer, and MRCD/MDB chips, the gross margin of the interconnect chip product line was 60.93%, an increase of 6.98 pct over the previous year.
The three AI high-performance “capacity” chips showed a good growth trend. According to the company's quarterly report for '24: (1) PCIe Retimer chip: successfully introduced to mainstream cloud computing/Internet vendors at home and abroad, large-scale shipments have begun. The 24Q1 shipment volume is about 150,000 units, more than 1.5 times the annual shipment volume. (2) MRCD/MDB chips: Server high-bandwidth memory modules with MRCD/MDB chips have begun large-scale trials at mainstream cloud computing/Internet vendors at home and abroad. 24Q1's MRCD/MDB chip sales exceeded 20 million yuan. (3) CKD chip: In April '24, the company pioneered trial production of DDR5 CKD chips. When the data rate reaches 6400MT/S or above, CSODIMM and CUDIMM need to be equipped with a CKD chip. Since AI PCs require higher bandwidth memory to improve overall computing performance, it will accelerate the penetration of CKD chips. CKD expects large-scale shipments to begin in 24Q2. Benefiting from AI industry trends driving demand for related products, as of April 22, the company expects to deliver PCIe Retimer, MRCD/MDB and CKD chips in 24Q2 to exceed 90 million yuan.
Profit forecasting and investment advice. EPS is expected to be 1.35, 2.23, and 3.50 yuan/share in 24-26, respectively. Considering the server boom, DDR5 penetration, and comparable company valuations, the company was given a 24-year 60xPE valuation, with a corresponding reasonable value of 81.10 yuan/share, giving it a “buy” rating.
Risk warning. The server boom and DDR5 penetration fell short of expectations, and new product development fell short of expectations.