2024H1's revenue increased year over year, profit adjusted somewhat, and maintained a “buy” rating

The company released its 2024 semi-annual report. 2024H1 achieved revenue of 2.285 billion yuan, +37.20% year over year; net profit to mother 0.354 billion yuan, -3.32% year over year; net profit after deducting non-return to mother 0.354 billion yuan, -3.43% year over year; gross sales margin of 42.12%, -6.94 pcts year on year. 2024Q2 achieved revenue of 1.095 billion yuan, +14.84% YoY, -7.95%; net profit to mother 0.157 billion yuan, -37.38% YoY, -20.82% month-on-month; net profit of 0.16 billion yuan after deducting non-return to mother, -35.81% YoY, -17.97% month-on-month; gross sales margin of 41.40%, -7.83 pcts YoY and -1.38pcts month-on-month. The main reasons for the increase in revenue in the first half of 2024 are: (1) the company increased its marketing efforts for filter module products, and the share of RF module sales continued to rise; (2) the company determined to enhance competitiveness through iteration of characteristic processes, redefined the business structure through resource platform construction, and promoted customer strategies through multi-dimensional development. Considering increased competition in the industry, we lowered the company's profit forecast for 2024-2025 and added a profit forecast for 2026. We expect net profit to be 1/1.359 billion yuan (previous value was 1.553/2.003 billion yuan), net profit to mother in 2026 is 1.627 billion yuan, and PE corresponding to the current stock price is 33.9/25.0/20.9 times. We are optimistic about the company's long-term development and maintain a “buy” rating.

Relying on building two major production lines, the company continues to expand product categories, and key customers are introducing them one after another

6-inch filter wafer production line: The product category of this production line has achieved a comprehensive layout, and has large-scale mass production capacity for discrete devices such as duplexer/quadrature devices and single-chip multi-band filters. At the same time, products such as DiFeM, L-DiFEM, and GPS modules that integrate self-produced filters have been successfully introduced to many brand customers and continue to be released. By the end of the reporting period, the production line had actually shipped more than 0.1 million pieces since mass production on a stable scale. 12-inch wafer production line: The company's 12-inch IPD platform has officially entered large-scale mass production, and the proportion of L-PAMIF, LFEM and other related module products using self-produced IPD filters has reached a high level. By the end of the reporting period, the company's first-generation process production line for 12-inch RF switches and low-noise amplifiers had completed process access and entered mass production in 2024Q2, and production capacity began to continue to rise. The company's 12-inch RF switches and low-noise amplifiers are used in process production line products, including discrete devices and module integrated devices. Currently, self-produced RF switches have been mass-produced and shipped, and will gradually be expanded to other types of products in the future. The number of clients of this type of product gradually increased during the reporting period, and has covered many brand customers and the vast majority of ODM customers.

Risk warning: downstream demand falls short of expectations; capacity release falls short of expectations; customer acquisition falls short of expectations.