Crystal Synthesis 2024H1's revenue is about 4.398 billion yuan, YoY +48%. The full utilization rate of 2024Q2 is expected to be reflected in 2024Q3 results. The company has made important breakthroughs in its multi-platform processes, and the company is actively expanding production to support the rapidly growing needs of the CIS. Maintain a buy rating.

Key points to support ratings

The high level of prosperity is expected to be reflected in the second half of the year's results. Jinghe Integrated's 2024H1 revenue was about 4.398 billion yuan, YoY +48%; gross margin was about 24.4%, YoY+6.2pcts; net profit due to mother was 0.187 billion yuan, YoY reversed losses; net profit not attributable to mother was 0.095 billion yuan, YoY reversed losses. Crystalline Integrated's 2024Q2 revenue was approximately 2.17 billion yuan, QoQ -3%, YoY +15%; gross profit margin 23.9%, QoQ-1.1 pcts, YoY 0.3 pcts; net profit to mother 0.108 billion yuan, QoQ +36%, YoY -62%; net profit without mother 0.037 billion yuan, QoQ -35%, YoY -84%. Fab plants usually have an interval of 1 to 3 months between release and delivery. According to the information disclosed on the Crystal Integration Investor Interactive Platform, from March to June 2024, the capacity utilization rate of Crystal Integrated was fully loaded to 110%, and the company raised OEM prices for some products along with the market. Orders in July were also higher than in June, and the company expects production capacity to continue at full capacity in 2024Q3. We believe that the full operating rate of Crystal Synthesis 2024Q2 and Q3 is expected to be reflected in the 2024Q3 and Q4 performance.

Major breakthroughs have been made in multi-platform processes. At present, Crystal Integration has achieved mass production of 55 to 150 nm process platforms. 2024H1 crystal integration implementation: 1) 40nm high-voltage OLED DDIC is mass-produced in small batches, and the 28nm platform is progressing steadily; 2) 55nm medium and high-end BSI and stacked CIS mass production; 3) the 110nm enhanced microcontroller platform (110nm embedded flash) was developed and simultaneously introduced into mass production. In the field of automotive chips, the company has obtained international automotive industry quality management system certification and passed vehicle regulation verification on multiple process platforms. In the AR/VR field, the company is developing silicon-based OLED-related technology and is developing in-depth cooperation with leading domestic panel companies.

The company is actively expanding production to support the rapidly growing needs of the CIS. In terms of revenue share, 2024H1 integrated DDIC, CIS, PMIC, MCU, and Logic accounted for about 69%, 16%, 9%, 2%, and 4% respectively; in 2023, DDIC, CIS, PMIC, and MCU accounted for 85%, 6%, and 2% respectively. The share of 2024H1 crystal integration CIS revenue increased significantly. As of 2024H1, Crystal Integration's current production capacity is about 0.115 million pieces/month (based on 12” conversion), and plans to expand production by 3 to 0.05 million wafers per month in 2024, mainly covering 40/55nm process nodes, and will use advanced CIS as the main production expansion direction.

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 August 14, 2024, the company's market value was about 29 billion yuan, corresponding to 2024/2025/2026 PE 39.0/24.6/19.8 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.