occurrences

On August 23, the company disclosed its 2024 semi-annual report.

The company 24H1 achieved revenue of 0.172 billion yuan, +34.86% year over year; net profit to mother of 2.5362 million yuan, -88.90% year over year; net profit after deducting non-attributable net profit of 3.5256 million yuan, -121.71% year over year.

The company achieved revenue of 0.128 billion yuan in 24Q2, +21.21% YoY, +191.25%; net profit to mother of 25.4347 million yuan, +35.21% YoY, turning a month-on-month loss into a profit; net profit of 21.8891 million yuan after deducting non-attributable net profit of 21.8891 million yuan, +26.91% YoY.

Key points of investment

EDA software has been accumulated and gradually released, and R&D continues to be strengthened to consolidate competitiveness. 1) 24Q2 performance correction: The company achieved revenue of 0.128 billion yuan, +21.21%, and +191.25% month-on-month; net profit to mother 25.4347 million yuan, +35.21% year-on-year, turning a month-on-month loss into a profit; net profit of 21.8891 million yuan after deducting non-attributable net profit of 21.8891 million yuan, or +26.91% month-on-month. 2) EDA software accumulation and gradual release: 24H1's revenue was 0.172 billion yuan, +34.86%. Among them, the software development and licensing business/test equipment and accessories business achieved revenue of 0.061/0.111 billion yuan, +86.81%/+17.21%. With the gradual recovery of industry sentiment, the company's accumulation of EDA software was gradually released. 3) Continuously increase R&D: In order to ensure its core competitiveness and continuous innovation ability, the company continues to maintain a high proportion of R&D investment. 24H1's R&D expenses were 0.132 billion yuan, accounting for 76.87% of revenue, or +41.77% year-on-year. 24H1 confirmed the share payment fee of $18.0291 million, and net profit to mother excluding the share payment fee was $20.5652 million. As of June 30, 2024, the company had 549 employees, including 454 R&D personnel, accounting for a total of 82.70% of the total number of employees. 4) Orders support future receipt: In terms of orders, the revenue amount corresponding to performance obligations that have been signed but not yet fulfilled or not fulfilled at the end of 24H1 is 0.413 billion yuan, supporting subsequent revenue growth.

The key gripper for improving yield, and the combination of software and hardware highlights the advantages. Taking 14nm process development as an example, each chip requires the production of a complete set of mask masks, and the manufacturing cost of each set of masks is about 2.4 million US dollars. Compared with traditional test chips, advanced test chips designed using the company's self-developed EDA tools and circuit IP and collaboration with wafer-level electrical test equipment can significantly improve chip area utilization and test efficiency, effectively reduce mask costs and the risk of flow plate failure, shorten process development and product verification time, and make customer products more competitive in the market. In the context of continuous changes and evolution of process nodes, the market competitiveness of the company's full-process products is becoming more and more prominent. During the 24H1 reporting period, the company's software and hardware products progressed smoothly: 1) In terms of EDA software, DFT design and yield diagnosis solutions have been integrated, and have been applied to many customers and achieved sales revenue. The technical performance has reached the level of benchmark tools and received good customer reviews; CMPEXP has been tested by many leading domestic companies, and significant progress has been made in the development of core modules for DFM tools. 2) In terms of data analysis, it continues to expand the depth and breadth of semiconductor big data analysis platforms. The semiconductor artificial intelligence application platform INF-AI was officially released and has been introduced and used by many customers; products such as DE-YMS and DE-DMS have obtained large-scale orders; semiconductor online big data analysis system development has progressed steadily and has been iteratively tested at customers; the DE-G function of semiconductor general data analysis software has been successfully refined to replace international general statistical analysis software. The application customer base has increased significantly. 3) In terms of hardware, research and development of key components of test equipment was completed, and the T4000 Max model with a self-developed high-performance matrix switch framework was launched. This model has a wide test coverage, high accuracy, high speed, and high configuration flexibility; wafer-level WLR test equipment has begun commercial implementation, which has become a new driving force for the diversified growth of the company's business.

Investment advice

We expect the company to achieve revenue of 0.651/0.973/1.374 billion yuan in 2024/2025/2026, and realized net profit of 0.148/0.242/0.374 billion yuan respectively. The current stock price corresponding to 2024-2026 PE is 51 times, 31 times, and 20 times, respectively, maintaining a “buy” rating.

Risk warning

Risk of technology development; risk of slowing industry development; risk of high customer concentration; risk due to scale expansion; risk of seasonal revenue fluctuations.