Incident The company released its 2024 mid-year report. The company achieved operating income of 3.016 billion yuan in the first half of the year, +28.33% year on year, and net profit of 0.362 billion yuan, +96.06% year over year; judging from the single quarter results, the company achieved revenue of 1.638 billion yuan, +24.53% year over year, and +18.82% month on month, achieving net profit of 0.235 billion yuan year on year, +52.07% year on month, +83.94% month on month, single quarter operation Revenue reached a record high.

Profitability has increased significantly, and R&D drives products to remain competitive. The company's 24H1 comprehensive gross margin was 35.37%, +0.40pct year on year, and the 24H1 net margin was 12.01%, +4.15pct year on year, of which 24Q2 net margin was 14.32%, +2.59pct year on year, and +5.07pct month on month. By the end of the reporting period, the company had 1,588 R&D personnel. R&D expenses increased 10.91% year on year to 6.741 billion yuan, R&D expenses -3.51 pct year on year to 22.35%, and the company's profitability continued to increase.

Overseas demand continues to rise, and the company's global layout and technological innovation are two-wheel drive. The company adheres to a global operation strategy, continuously strengthens brand promotion and market development, while focusing on independent research and development of core technologies, promoting internal control system construction and corporate governance management, and improving management standards. In terms of products, 1) S series: full coverage of domestic operators and mainstream manufacturers in overseas markets. During the reporting period, the company successfully filmed a next-generation ARM V9 architecture and 6nm commercial chips with self-developed edge AI capabilities, and received the first batch of commercial orders. 2) T series: As the core component of smart display terminals, it is widely used in smart TVs, smart projectors, smart commercial displays, etc. The company's T series products have continuously achieved important customers and market breakthroughs. The sales revenue of 24H1 and T series products increased by about 70% over the same period last year. 3) A series: Used in the AIOT field, the company's products have system-level platform advantages, versatility, expandability, etc., and the application fields of the company's chips will be further enriched and expanded in the future. 4) W series: In a single quarter of 24Q2, W series products accounted for more than 8% of the company's total shipments in the second quarter. In 2024, the company will also launch a new three-mode combination product (Wi-Fi 6+BT5.4.+802.15.4), which supports Thread/Zigbee, and can give terminal products applications such as Matter controllers and IoT gateways. 5) Automotive electronic chips: Increased overseas penetration rate, successful streaming of next-generation products, and continuous customer expansion.

Investment advice: The company is a leading domestic SoC chip manufacturer. We believe that the market demand inflection point is obvious at the moment. The company is expected to further improve its performance as global consumer electronics demand recovers and new categories expand. We raised the company's profit forecast. We expect the company to achieve net profit of 0.826/1.168/1.491 billion yuan in 2024-2026, corresponding PE of 22.53x/15.94x/12.49x, maintaining the “recommended” rating.

Risk warning: the risk of downstream demand falling short of expectations, the risk of increased market competition, and the risk of new product releases falling short of expectations.