1H24's performance is booming, R&D progress is accelerating, and demand is picking up. Shengbang Co., Ltd. released its semi-annual report. In 2024, H1 achieved revenue of 1.576 billion yuan (yoy +37.27%) and net profit of 0.179 billion yuan (yoy +99.31%). Among them, Q2 achieved revenue of 0.847 billion yuan (yoy +33.42%, qoq +16.23%) and net profit of 0.124 billion yuan (yoy +109.10%, qoq +128.50%). The gross margin of 1H24 was 52.33%, +0.8pcts year-on-year. The gross margin remained steady, the R&D cost ratio reached 26.5%, and the company's new product development progress accelerated. Currently, some fields of industry and automobiles may have bottomed out. I am optimistic that the simulation industry's prosperity will gradually improve, and the company benefits as a leading domestic analog device. We expect a profit of 0.46/0.64/0.91 billion yuan in 2024-2026, maintain the “purchase”, give 72.5 times PE for 25 years (the company's median valuation since listing is 86.5 times PE), and the target price is 98.6 yuan.

1H24 review: Performance has increased rapidly, gross margin has remained steady, Q2 profit levels have been greatly improved. Currently, the company can sell more than 5,200 products, covering 32 categories. New material models have begun to contribute revenue, and customer penetration continues to increase. 1H24 signal chain product revenue was 0.54 billion yuan, accounting for 34%, up 22.7% year on year, gross profit margin was 57.3%, down 3.2 pcts year on year; power management product revenue was 1.04 billion yuan, accounting for 66%, up 46.3% year on year, and gross profit margin was 49.8%, up 3.8 pcts year on year. The company's share of high-margin products increased. 1H24 gross margin was 52.33%, +0.8pcts year-on-year, of which 2Q24 gross margin was 52.19%. 1H24 spent 0.42 billion yuan on R&D, accounting for 26.49% of revenue.

There are 1,085 R&D personnel, accounting for 73.06% of the total number. Q2 revenue in a single quarter reached a record high of 0.847 billion yuan (qoq +16.23%), and net profit to mother rose sharply to 0.124 billion yuan (qoq +128.50%).

Outlook: Downstream demand continues to grow, new product expansion is accelerating. Looking ahead to the future of the company's platform-based layout, we see 1) current demand continues to improve, and some fields of industry and automobiles may have bottomed out. We are optimistic that the simulation boom will improve, and the company will benefit as the leading domestic analog device core; 2) On the price side, we see that competitive pressure is slowing down compared to last year, while the company's high-value products gradually contribute revenue, and the overall gross margin gradually stabilizes; 3) The company continues to expand new customers for new products. The company continues to launch new products, including dual-channel 2A flash LED drivers, high-side current-sensing operational amplifiers with a common mode input voltage range of 24V to 105V, automotive-grade synchronous step-down chips, LDO chips, and high-speed low-side driver chips. The company has now achieved good results in the fields of electric vehicles, industrial control, 5G communications, the Internet of Things, smart homes, wearable devices, drones, intelligent manufacturing, etc., and has expanded its customer base.

Maintaining a “buy” rating, the target price is 98.6 yuan

Taking into account the improved economic climate, we maintained the 24-25 revenue forecast of 3.25/4.02/5 billion yuan, and the corresponding net profit to mother was 0.46/0.64/0.91 billion yuan. Maintain the “purchase”, and considering the gradual return of the company's net interest rate, give 72.5 times PE for 25 years (the median valuation of the company since listing is 86.5 times PE), and the target price is 98.6 yuan.

Risk warning: Global semiconductors have entered a downward cycle, demand for mobile phones, etc. falls short of expectations, and industry competition has intensified.