Net profit attributable to mother for 24Q1 was +10 times year on year, after deducting non-net profit +741 times year on year. The performance exceeded expectations.
The 24Q1 quarterly revenue was 737 million yuan, +75.7% YoY, -3.1% month-on-month, and net profit of 223 million yuan, up 10.3 times YoY, +2.9% month-on-month after deducting non-net profit of 220 million yuan, up 741.2 times YoY, +2.6% month-on-month. The month-on-month increase in net profit was mainly due to the launch of new Q1 Internet products, which led to an increase in gross margin. The gross profit margin for the 24Q1 quarter was 57.70%, +4.41pct yoy, +0.27pct month-on-month, net profit margin 30.30%, +25.60pct yoy, +1.75pct month-on-month, net profit margin 29.79%, +29.72pct yoy, and +1.64pct month-on-month. The year-on-year increase in Q1 performance mainly benefited from the AI wave, and large-scale shipments of new connected products (PCIe Retimer, MRCD/MDB chips) began.
24Q1 interconnect chip revenue hit a record high in Q1. Impossible? Server platforms -40.5% month-on-month.
1) The largest business is interconnect chips. The 24Q1 quarter revenue was 695 million yuan, accounting for 94% of revenue, +68.4% year-on-year, and +0.3% month-on-month, setting a record high in the Q1 revenue record for this product line. The gross profit margin was 60.93%, +6.98pct year over year, and -1.98pct month-on-month. 2) Is the second largest business out of the park? Server platform, 24Q1 revenue of 39 million yuan, accounting for 5% of revenue, +614.6% year-on-year, and -40.5% month-on-month.
It is expected that 24H2 DDR5 third-generation RCD chips will be shipped on a large scale, and new DDR5 product iterations will help growth.
In January 2024, the company launched the fourth generation DDR5 RCD chip, which supports a data rate of 7200MT/S, and has sent engineering samples to major memory manufacturers. Shipments of DDR5 second-generation RCD chips are expected to exceed first-generation products at 24H1, and large-scale shipments of DDR5 third-generation RCD chips are expected to begin at 24H2.
The three AI high-performance “capacity” chips were quickly released, and it is estimated that orders in hand for delivery in Q2 will exceed 90 million yuan.
1) PCIe Retimer chips: 24Q1 shipped about 150,000 units in a single quarter, more than 1.5 times its annual shipment volume in '23. 2) MRCD/MDB chips: In a single quarter of 24Q1, MRCD/MDB chip sales exceeded 20 million yuan for the first time. 3) CKD chips: In April '24, the company took the lead in trial production of DDR5 CKD chips in the industry, and large-scale shipments are expected to begin in 24Q2. As of April 22, 2024, the company expects the total amount of in-hand orders for the above three AI high-performance “capacity” chips to be delivered in 24Q2 has exceeded 90 million yuan.
The leading domestic memory interface chip maintains an “gain” rating.
As a leading domestic memory interface chip, the company will fully benefit from the increase in DDR5 penetration rate and the AI wave. Furthermore, the domestic CPU market space is large, the proportion of domestic manufacturers is still low, and the company has broad room for future growth. The company's net profit for 2024-2026 is estimated to be 11.25/16.14/2,015 billion yuan, respectively, corresponding to the 24/25/26 PE of 49/34/27 times, maintaining the “gain” rating.
Risk warning: risk of global trade friction; risk of product development; risk of customer concentration; risk of falling inventory prices.