Incident review: The company released a semi-annual performance forecast for 2024. The company expects to achieve net profit of 159.5 million yuan to 195 million yuan in the 2024 semi-year, which will increase 134.7 million yuan to 170.2 million yuan compared with the same period last year, an increase of 543.15% to 686.29% over the previous year; it is expected to achieve net profit of 153.6 million yuan attributable to the owner of the parent company in the first half year of 2024 189 million yuan, an increase of 138.6 million yuan to 174 million yuan compared with the same period last year, a year-on-year increase of 924.00% to 1,160.00%.
Market demand gradually recovered, and Q2 performance exceeded expectations: According to the performance forecast issued by the company, in the first half of 2024, market demand gradually recovered, and AIoT ushered in growth. During the reporting period, relying on the advantages of AIoT product layout, the company continued to penetrate various AIoT product lines and continued to break through in the fields of automotive electronics, machine vision, industrial applications, education and consumer electronics. The company expects to achieve net profit of 159.5 million yuan to 195 million yuan in the half year of 2024, an increase of 134.7 million yuan to 170.2 million yuan compared with the same period last year, an increase of 543.15% to 686.29% over the same period last year. The Q1 company achieved net profit of 67.6497 million yuan in 2024, corresponding to the net profit range of 91.85 million yuan to 127.35 million yuan in Q2 in 2024, with a median range of about 0.11 billion yuan. It is expected to increase about 62% month-on-month and 150% year-on-year. Considering that this round of performance releases was driven by a gradual recovery in market demand, we expect this trend to continue.
New products have been released one after another and key tracks continue to advance, and prospects for various fields such as automotive & AI can be expected: In March 2024, the RK3576 was officially released at the 8th Rockchip Microchip Developer Conference, and several leading customers have already exhibited product prototypes based on the RK3576 at the conference site. The RK3576 uses advanced process design, is equipped with the latest generation NPU with 6TOPs computing power developed by the company, supports operators related to the Transformer model architecture, and can support the efficient operation of various AI algorithms. At the same time, it has also upgraded other proprietary IPs such as ISP, video codec, video post-processing, etc., and has further improved performance and processing effects. It has suitable cost performance and product competitiveness in similar products, and can be widely used in automotive smart cockpits, tablets, e-books, interactive screens, projectors, Mainstream products in markets such as network storage devices, cloud computers, machine vision, and industrial applications. The company has fully expanded in the field of automotive electronics, and has initially formed a rich layout rarely found in the industry, including five major front-end product lines and various types of rear-assembly products. Among them, in the field of smart cockpits, the company released and mass-produced several electric vehicles equipped with the RK3588M in 2023, creating the highest speed in the industry in just one and a half years from chip launch to mass production, and was highly recognized by the market. Faced with the contradiction between the rapid growth in demand for computing power and the iterative upgrade cycle of SoC system-level chips, the company will develop AI computing power coprocessor chips to solve this problem. By cooperating with AIoT chip platforms such as RK3588 and RK3576, the AI computing power coprocessor can further meet the AI computing power upgrade needs of edge-side and end-side devices, and help implement artificial intelligence technology in various industries.
As the company continues to advance in various fields such as automotive, industrial, and tablet devices, we are optimistic about the company's development prospects brought about by the combination of factors such as increased market demand, increased company shipments, and increased ASP upgrades in high-end materials.
Investment proposal: Maintaining the previous forecast, the company's revenue for 2024-2026 is estimated to be 2.713 billion yuan, 3.652 billion yuan, and 4.748 billion yuan respectively, with year-on-year growth rates of 27.1%, 34.6%, and 30.0% respectively. The estimated net profit attributable to shareholders of listed companies is 0.406 billion yuan, 0.646 billion yuan, and 0.873 billion yuan, respectively, with year-on-year growth rates of 201.3%, 59.0%, and 35.1%, respectively. The corresponding PE is 68.5 times, 43.1 times, and 31.9 times, respectively. Considering that the company is a leading domestic SoC listed company, compounding the huge prospects of future human society's future development and computing power requirements, edge side AI can be expected to accelerate and maintain the buy-A proposal.
Risk warning: the risk of the terminal market falling short of expectations, the risk of tight wafer production capacity and rising raw material prices, the risk of increased competition in the industry, and the risk of new product introduction falling short of expectations.