Crystal Integration announced its 2024 semi-annual report. Revenue and profit improvements for the first half of 2024 were significant on the revenue and profit side: in the first half of 2024, the company achieved operating income of 4.398 billion yuan, an increase of 48.1% over the same period in 2023; net profit attributable to shareholders of listed companies was 0.187 billion yuan, an increase of 528.8% over the same period in 2023. Revenue increased by 1.428 billion yuan over the same period last year, up 48.09% year on year, mainly due to a gradual recovery in industry sentiment and rapid overall sales growth in the first half of the year. Net profit attributable to shareholders of listed companies and net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss increased by 0.23 billion yuan and 0.24 billion yuan respectively over the same period of the previous year. This was mainly due to the year-on-year increase in the company's operating income during the reporting period, as well as the continued increase in capacity utilization, a decrease in unit sales costs, and an increase in product gross margin.

The company continues to increase investment in R&D to consolidate its technological advantages

The company's R&D expenses increased from 0.502 billion yuan in the first half of 2023 to 0.614 billion yuan in the first half of 2024, an increase of 22% over the previous year. The R&D expenditure rate was reduced from 16.92% in the first half of 2023 to 13.97% in the first half of 2024.

The company's product structure continues to be enriched, and the process platform is diversified. The company has achieved mass production of process platforms such as DDIC, CIS, PMIC, MCU, and Logic. The product structure is becoming more and more diverse. The product applications cover many fields such as smartphones, computers, tablet displays, automotive electronics, smart household appliances, industrial control, and the Internet of Things. During the reporting period, the company continued to launch new market-competitive products and further optimized the product structure. Among them, 40nm high-voltage OLED display driver chips have been produced in small batches; 55nm medium and high-end BSI and stacked CIS chips have been mass-produced, CIS products can reach 50 million pixels, and the products have entered the middle and high-end mobile phone market.

Display panels are an important component for information display. DDIC is the core chip for display panels. The company's main OEM product is DDIC, while expanding the crystal integration of CIS, MCU, PMIC and other process platforms to mainly engage in 12-inch wafer foundry business to provide customers with wafer foundry services for DDIC and other process platforms. The main application areas of the company's foundry service products are mainly panel display driver chips. The company's 150nm-90nm LCD display driver chip technology was improved and optimized on the basis of Lipin Technology's technology transfer technology, and formed after innovation and upgrading.

Looking at the process foundry platform, DDIC foundry for driver chips is the company's main revenue source. Judging from the product classification for the first half of 2024, DDIC, CIS, PMIC, MCU, and Logic accounted for 68.53%, 16.04%, 8.99%, 2.44%, and 3.82% of the main business revenue, respectively. Among them, CIS accounted for a significant increase in the proportion of the main business revenue, and has become the company's second largest product spindle, and CIS production capacity is at full load.

The company's main revenue comes from 150nm to 90nm technology nodes. 55nm technology nodes account for a rapid increase in revenue. Judging from the process node classification in the first half of 2024, 55nm, 90nm, 110nm, and 150nm accounted for 8.99%, 45.46%, 29.40%, and 16.14% of the main business revenue, respectively. Compared to the first half of 2023, the company's 90nm and below processes accounted for 95.17% of the company's overall revenue in the first half of 2023. Among them, the 90nm process is the company's core main revenue, reaching 1.477 billion yuan accounting for 49.92%, 110nm process revenue of 0.936 billion yuan accounting for 31.65%, and 150nm process revenue of 0.402 billion yuan, accounting for 13.60%. The company's more advanced 55nm process revenue was 0.143 billion yuan, accounting for 4.83%.

Investment advice

We expect the company's 2024-2026 revenue to be 10.078 billion/12.957 billion/15.204 billion yuan, respectively. Net profit attributable to mother was 0.583 billion/0.961 billion/1.446 billion yuan, corresponding EPS was 0.29/0.48/0.72 yuan, and corresponding PE was 52/32/21 times, respectively, maintaining the “gain” rating.

Risk warning

Consumer electronics demand is weak, DDIC inventories are high, market competition is intensifying, and technology iteration falls short of expectations.