Incident: Shengbang Co., Ltd. released its 2024 mid-year report. In the first half of 2024, the company achieved revenue of 1.576 billion yuan, up 37.27% year on year; achieved net profit of 0.179 billion yuan, up 99.31% year on year; realized net profit deducted from mother 0.158 billion yuan, up 223.43% year on year; looking at Q2 alone, the company achieved revenue of 0.85 billion yuan, up 33.42% year on year, 16.23% month on month; achieved net profit to mother 0.124 billion yuan, up 109.10% year on year, up 128.50% month on month; net profit without return to mother was 0.108 billion yuan, up 152.25% year on year, up 113.43% month on month.

The advantages of improving the product matrix are obvious, and independent R&D and innovation help increase performance. The company has strong independent R&D strength and innovation capabilities. Over the past 20 years, it has continued to increase investment in R&D, further strengthening its core technological innovation capabilities. It has accumulated a number of core technologies in the two major fields of signal chain analog chips and power management analog chips, and launched a series of products that meet market needs and have the characteristics of “diversity, completeness and segmentation”. Some product key technical indicators have reached the leading international level. Mainly in the fields of industry and automotive electronics, the company actively responds to various changes, continuously deepens cooperation with customers, actively explores new markets and customers, further improves supply chain management and cost control, and fully benefits from market recovery. By product, the company's main business is in the two major fields of signal chain and power management. It achieved revenue of 0.538 and 1.038 billion yuan respectively, with year-on-year increases of 22.66% and 46.30%, and gross margins of 57.30% and 49.75%, respectively, with year-on-year changes of -3.21 and 3.80 percentage points.

The research and development of new projects is progressing smoothly, and the market share is constantly being expanded. The company always attaches importance to independent product development and product matrix construction, and continuously concentrates on increasing investment. 24H1's R&D expenses were 0.418 billion yuan, the R&D rate was 26.49%, and the R&D personnel were 1,085, accounting for 73.06% of the company's total number of employees.

Stable R&D investment and core team ensure the smooth progress of the company's R&D projects, and continues to launch new products with completely independent intellectual property rights. The company continues to track market developments and changes, especially in application fields such as new energy vehicles, photovoltaic energy storage, artificial intelligence, intelligent manufacturing, etc., and actively lays out and reserves related technologies, intellectual property rights and products. It has now achieved good sales performance in the fields of electric vehicles, industrial control, 5G communications, Internet of Things, smart homes, wearable devices, drones, intelligent manufacturing, etc., and will continue to take advantage of product performance and rapid market response to be close to customers, seize business opportunities in an accurate and timely manner, and further expand domestic and foreign market share.

Investment advice

As a leading analog IC design manufacturer in China, the company has always adhered to the development route of independent research and development, guided by technological innovation. We expect the company to achieve revenue of 3.245, 4.006, and 4.895 billion yuan respectively in 2024-26, and achieve net profit of 0.423, 0.668, and 0.95 billion yuan, corresponding to PE 106.57, 67.46, and 47.45x, maintaining the company's “buy” rating.

Risk warning: Downstream demand falls short of expectations; industry competition increases risk; new product development falls short of expected risk