24H1 deducted non-net profit +141.8 times year-on-year, benefiting from increased DDR5 penetration rate+the increase in AI new products.

24H1's revenue was 1.665 billion yuan, +79.5% year on year, net profit of 0.593 billion yuan, +6.2 times, after deducting non-net profit of 0.544 billion yuan, +141.8 times year on year. It mainly benefited from the restorative growth in demand for memory interface and module supporting chips, increased DDR5 penetration rate, and large-scale shipments of new AI “capacity” chips.

24Q2 quarterly revenue of 0.928 billion yuan, +25.8% month-on-month, net profit of 0.37 billion yuan, +65.5% month-on-month after deducting non-net profit 0.325 billion yuan, +47.8% month-on-month; gross profit margin 57.83%, +0.13pct month-on-month, net profit margin 39.86%, +9.55pct month-on-month, net profit margin 34.99%, month-on-month +5.20pct. The month-on-month increase in net interest rate in the Q2 quarter was mainly due to the increase in Q2 government subsidies, which led to other yields of +7.20pct month-on-month.

Q2 interconnect chip revenue +19.9% month-on-month, and Jinjiao server platform revenue +134.4% month-on-month.

1) The largest business is interconnect chips. 24Q2 revenue in a single quarter was 0.833 billion yuan, +19.9% month-on-month, accounting for 90% of revenue, 63.68% of gross margin range, +2.75pct month-on-month, mainly due to steady month-on-month growth in 24Q2 memory interface and module chip revenue, which was compounded by the release of new AI products.

2) The second largest business is the Jinjiao server platform. 24Q2 had revenue of 0.091 billion yuan in a single quarter, +134.4% month-on-month, accounting for 10% of revenue, mainly benefiting from the restorative growth of the server market.

Samples of the 24H1 DDR5 fourth generation RCD chip have been delivered, and continuous iteration of new DDR5 products boosts growth.

24H1 DDR5 second-generation RCD chip shipments have surpassed first-generation products. The company's third-generation RCD chips are expected to begin large-scale shipments of 24H2, and DDR5 fourth-generation RCD chips have been released and samples have been sent to memory module manufacturers. According to TrendForce's forecast, the penetration rate of DDR5 memory modules will exceed 50% starting in 24Q3, and it is expected that the future will continue to benefit from the increase in DDR5 penetration rate and the iterative promotion of new DDR5 products.

Benefiting from the AI wave, orders for PCIe Retimer chips expected to be delivered in the Q3 quarter are around 0.6 million.

The company's three new high-performance “capacity” chips were rapidly released. The total revenue for the Q2 quarter was about 0.13 billion yuan, which more than doubled from month to month. Among them, PCIe Retimer chip shipments doubled to about 0.3 million units in the Q2 quarter, benefiting from strong global demand for AI servers and an increase in the company's market share. As of July 22, the company expects to deliver about 0.6 million PCIe Retimer chip orders in Q3.

The leading domestic memory interface chip maintains an “gain” rating.

As a leading domestic memory interface chip, the company will fully benefit from the increase in DDR5 penetration rate and the AI wave. Furthermore, the domestic CPU market space is large, the proportion of domestic manufacturers is still low, and the company has broad room for future growth. The company's net profit from 2024 to 2026 is expected to be 1.327/1.968/2.573 billion yuan respectively, corresponding to PE 46/31/24 times in 24/25/26, maintaining the “increase in holdings” rating.

Risk warning: risk of global trade friction; risk of product development; risk of customer concentration; risk of falling inventory prices.