Incident: The company released a semi-annual performance forecast for 2024. During the reporting period, net profit attributable to the company's shareholders was 0.288-0.375 billion yuan, an increase of 253.44%-299.79% over the same period last year; net profit after deducting non-recurring profit and loss was 0.265-0.355 billion yuan, an increase of 201.37%-235.80% over the same period last year.

Downstream demand picked up, and 24Q2 net profit increased sharply month-on-month: the semiconductor industry experienced a recovery in the first half of 2024, market demand picked up, and the company's capacity utilization rate increased, which led to a sharp year-on-year increase in 24H1's revenue. Looking at 24Q2, the company's revenue increased significantly compared to the second quarter of 2023 and the first quarter of 2024. At the same time, thanks to strengthened management and cost control, the company's overall efficiency has improved significantly. 2024Q2 expects to achieve net profit of 0.19-0.277 billion yuan, turning a loss into a profit over the previous year, with a year-on-year increase of 92.41% to 180.74%.

AMD introduces the MI 350 with significant performance improvements:

At the 2024 Computex conference, AMD showcased its latest AI chip, Instinctmi350. The GPU uses TSMC's 3nm process and is also equipped with 288GB of HBM3E memory. Compared with the MI300 series, its AI inference performance is an astonishing 35 (3500%) improvement. The HBM memory capacity of the MI350 will be 1.5 times that of the Nvidia B200, and the AI computing power is 1.2 times that of its competitor. The company is AMD's core packaging and testing factory, and has formed a strong joint model of “joint venture+cooperation” with AMD, which is expected to continue to benefit from AMD's rapid growth in the field of AI chips.

The AI PC penetration rate is expected to grow rapidly, and the company is deeply tied to AMD's continuing to benefit from industry trends:

According to Canalys data, global AI PC shipments will reach 48 million units in 2024, accounting for 18% of total PC (PC) shipments. But this is only the beginning of a market transformation. It is estimated that by 2025, AI PC shipments will exceed 0.1 billion units, accounting for 40% of total PC shipments. AIPC has put forward higher computing power requirements for chips, promoting the upgrading of PC chips. The company is the core testing factory for AMD, the world's leading PC processor company, and is expected to continue to benefit from AI PC industry trends in the future.

Investment advice:

We expect the company's revenue from 2024 to 2026 to be 28.661 billion yuan, 32.73 billion yuan, and 34.858 billion yuan, respectively, and net profit to mother of 1 billion yuan, 1.408 billion yuan, and 1.904 billion yuan, respectively. Considering the company's leading layout of advanced packaging and deep binding to AMD's major customers, it is expected that AI demand will continue to advance, giving the company an estimated value of PE45.00X in 2024, corresponding to a target price of 29.72 yuan. Give it a “buy-A” investment rating.

Risk warning:

The risk of new technologies, new processes, and new products not being industrialized as scheduled, the risk of industry and market fluctuations, the risk of international trade friction, and the risk of rising product production costs.