The company's 2024Q2 revenue increased year-on-year, with a significant increase in net profit. Maintaining the “buy” rating, the company released its 2024 semi-annual report. The company achieved revenue of 15.487 billion yuan, YoY +27.22%; net profit due to mother of 0.619 billion yuan, YoY +24.96%; deducted non-net profit of 0.581 billion yuan, YoY +53.46%; of these, 2024Q2 revenue was 8.645 billion yuan, YoY +36.94%, QoQ+ 26.34%; net profit to mother 0.484 billion yuan, YoY +25.51%, QoQ +257.96%; net profit after deducting non-net profit of 0.474 billion yuan, YoY +46.86%, QoQ +339.87% The closed testing industry is still in a gradual recovery stage. We lowered the company's profit forecast for 2024-2026, and expected net profit to mother for 2024/2025/2026 2.126/3.003/3.964 billion yuan (previous value 2.475/ 3.027/4.019 billion yuan), which is expected to be EPS 1.19/1.68/2.22 yuan in 2024/2025/2026 (previous value 1.38/1.69/2.25 yuan). The current stock price corresponds to PE of 25.7/18.2/13.8 times. We are optimistic about the long-term growth of the company as a domestic testing leader in high-value-added markets such as high-performance computing power and storage, and maintaining a “buy” rating.

The 2024H1 capacity utilization rate has increased significantly. The multi-field layout of advanced packaging helped long-term growth in the first half of 2024. In terms of application areas, communication electronics accounted for 41.3%, consumer electronics accounted for 27.2%, computational electronics accounted for 15.7%, industrial and medical electronics accounted for 7.5%, and automotive electronics accounted for 8.3%.

Revenue in corresponding application areas was communications electronics +48.4%, consumer electronics +32.6%, computational electronics +21.8%, industrial and medical electronics -17.0%, and automotive electronics +0.6%, respectively. In addition, the company's 2024H1 capacity utilization rate increased significantly, and the core production line accelerated equipment investment to expand production capacity. Among them, Changdian Korea achieved revenue of 0.862 billion US dollars, +58.19% year over year, and net profit of 0.011 billion US dollars, or +195.39% year over year. This is mainly due to a recovery in market demand for communication electronics, computational electronics, etc., and an increase in order volume. The company accelerates the strategic layout of high-value-added markets such as automotive electronics, high-performance computing, storage, and 5G communications, and further enhances its core competitiveness.

(1) In the field of high-performance advanced packaging, the company's XDFOI platform covering 2D, 2.5D, and 3D integrated technology has entered the stable mass production stage. (2) In the field of automotive electronics, an automotive electronics manufacturing plant was established in Lingang, Shanghai, and a pilot line was built at the Jiangyin factory, the electric drive core power module sealing and testing production line was successfully provided to internationally renowned customers in the field of sample (3) storage. By promoting the acquisition of 80% of Sheng Disc Semiconductor's shares, the market share in the field of storage and computational electronics was expanded. As AI terminals drive up demand and consumer electronics enter the traditional peak season, we expect 2024H2's operating rate to continue to increase, further driving performance growth.

Risk warning: The development of the domestic AI industry chain falls short of expectations; market competition intensifies; technology research and development falls short of expectations.