2Q24 results are in line with our expectations

The company announced 1H24 results: 1H24 revenue 0.172 billion yuan, +34.86% year over year; gross profit margin 65.52%, year-on-year +3.2ppt; net profit attributable to mother 0.003 billion yuan; net profit not attributable to mother - 0.004 billion yuan. 2Q24 revenue was 0.128 billion yuan, +21.21% year over month, +191% month on month; gross profit margin 64.45%, year over year +7.58ppt; month-on-month -4.19ppt; net profit to mother 0.025 billion yuan; net profit not attributable to mother 0.022 billion yuan. In the first half of 2024, software development and licensing revenue was 60.57 million yuan, with a gross margin of 89.33%; revenue from test equipment and accessories was 0.111 billion yuan, with a gross margin of 52.74%. It met our expectations.

Development trends

The AI application platform was officially released to empower the semiconductor industry. In 2024, the company's semiconductor artificial intelligence application platform INF-AI was officially released, and has been introduced and used by many customers to enable design and manufacturing; the semiconductor offline big data analysis system has been completely laid out and continuously iteratively upgraded, and products such as DEYMS and DE-DMS have obtained large-scale orders; the development of semiconductor online big data analysis systems has progressed steadily and has been iteratively tested at customers; the DE-G function of semiconductor general data analysis software has been gradually refined and matured, successfully replacing international general statistical analysis software.

Continue to launch hardware devices that are more suitable for the market. In the first half of 2024, the company launched the T4000Max semiconductor parameter tester, which uses a self-developed high-performance matrix switch structure. It has the characteristics of high accuracy, high speed, flexible configuration, etc., and is suitable for various test scenarios such as process research and development, wafer-level reliability, and mass production WAT.

Continued investment in R&D expenses. In the first half of 2024, the company spent 0.132 billion yuan on R&D, accounting for 76.87% of revenue, a year-on-year increase of 41.77%. As of June 30, 2024, the company had a total of 549 employees. Compared with a growth rate of nearly 10% at the end of 2023, we expect the number of employees to continue to increase in 2024.

Profit forecasting and valuation

Due to resistance in the promotion of the software business in the first half of 2024 and delays in the capital expenditure of the hardware business, the results of the second half of 2024 and 2025 may be adversely affected. We lowered our 2024 and 2025 profits by 19.2% and 22.6% to 0.154 billion yuan and 217 million yuan. Maintaining an outperforming industry rating, the target price was lowered by 18.8% to $55.08 (based on the 2026 SOTP, 9.8% discount to 2024), with 49% upside compared to the current stock price.

risks

International fluctuations and industry fluctuations risk; hardware demand falls short of expectations; software business promotion falls short of expectations. Yu Zhong Hai