Jinghe Integrated predicts that 2024H1 had a median revenue of 4.4 billion yuan, YoY +48%; a median net profit of 0.093 billion yuan after deducting non-return to mother would be 0.093 billion yuan, turning a year-on-year loss into a profit. The company's 2024Q2 utilization rate is fully loaded and is expected to continue until Q3. The high level of prosperity is expected to be reflected in the second half of the year's results. Maintain a buy rating.

Key points to support ratings

Revenue grew steadily year over year. Jinghe Integrated predicts 2024H1 revenue of 43.00 to 4.5 billion yuan, with a median value of 4.4 billion yuan, YoY +48%; net profit without return to mother of 0.75 to 0.11 billion yuan, with a median value of about 0.093 billion yuan, turning a year-on-year loss into profit. If calculated according to the median forecast, CRIC's 2024Q2 revenue was 2.172 billion yuan, QoQ -3%, YoY +16%; net profit without return to mother was 0.036 billion yuan, QoQ -38%, and YoY -85%.

The full operating rate drove volume and prices to rise sharply, and the high level of prosperity is expected to be reflected in the second half of the year's results. According to information disclosed on the Crystal Integration Investor Interactive Platform, from March to June 2024, Crystal Integrated's production capacity remained at full load, with an operating rate of 110%, and orders had already exceeded production capacity. Crystal Integration has raised OEM prices for some products according to market conditions. The company's July orders were also higher than in June, and production capacity is expected to continue at full capacity in 2024Q3. Based on industry experience, fabs usually have an interval of 2 to 3 months from launch to delivery. We believe that the full operating rate of Crystalline Integrated 2024Q2 and Q3 is expected to be reflected in the 2024Q3 and Q4 performance.

OLED platforms are progressing steadily, and CIS is actively expanding production. The company's 40nm high-voltage OLED process has achieved small-batch mass production, and 28nm OLED process research and development is progressing steadily. Automotive-grade DDIC has also begun gradual mass production. CIS has grown to become the company's second-largest spindle product, and the middle to high-end CIS production capacity was at full capacity in the first half of 2024. The 40/55 nm medium to high-end CIS will also become the main product for expanding production in 2024.

As of June 2024, the 12-inch crystal integration production capacity is about 0.115 million pieces/month, and production capacity is expected to increase by 3 to 0.05 million pieces/month in 2024.

valuations

The estimated EPS for the 2024/2025/2025/2026 integration is 0.37/0.59/0.73 yuan, respectively.

As of the close of July 15, 2024, the company's market value was about 30.2 billion yuan, corresponding to 2024/2025/2026 PE 40.7/25.7/20.6 times, respectively. Maintain a buy rating.

The main risks faced by ratings

Market demand fell short of expectations. The competitive landscape in the industry has deteriorated. Product development progress falls short of expectations.