occurrences

On October 26, 2024, Changdian Technology announced its report for the third quarter of 2024. The company achieved revenue of 24.98 billion yuan in the first three quarters, an increase of 22.26% over the previous year, achieved net profit of 1.08 billion yuan in the first three quarters, an increase of 10.55% over the previous year, and achieved net profit without return to mother of 1.02 billion yuan in the first three quarters, an increase of 36.7% over the previous year. Corresponding to 3Q24, we achieved operating income of 9.49 billion yuan in a single quarter, up 14.9% year on year, up 9.8% month on month, net profit of 0.46 billion yuan, down 4.4% year on year and 5.6% month on month. Net profit after deducting non-return to mother in a single quarter was 0.44 billion yuan, up 19.5% year on year and down 7.2% month on month.

A record high in revenue in a single quarter

Changdian Technology achieved revenue of 9.49 billion yuan in a single quarter, up 14.9% year on year and 9.8% month on month. Net profit returned to mother for the single quarter was 0.46 billion yuan, down 4.4% year on year and 5.6% month on month. Net profit without return to mother was 0.44 billion yuan in the single quarter, up 19.5% year on year and 7.2% month on month.

The company's revenue in a single quarter reached a record high, reflecting the company's operating resilience. The company's net profit in the single quarter declined month-on-month. The main influencing factor was the change in gross margin: the company's 3Q24 gross profit margin was 12.2%, down 2.2 pct year on year, and 2.1 pct month-on-month, affecting the amount of gross profit decreased by 0.074 billion yuan month-on-month. We believe it was mainly affected by SIP business volume and exchange factors. As the industry continues to recover, we believe that the company's operations are still on a positive trend, and we can expect to see a gradual recovery in gross margin in the future.

Focus on high-performance advanced packaging, and display Shengdi Semiconductor

Advanced packaging has brought new growth opportunities. Major manufacturers such as TSMC and Intel have increased their investment in advanced packaging, bringing more opportunities and challenges to semiconductor packaging companies. Changdian focuses on high-performance advanced packaging, strengthens innovation and upgrading, and promotes steady business development. The xDFOICHiplet high-density multi-dimensional heterogeneous integration series process launched by the company has entered a stable mass production stage as planned, and can be applied in the fields of high-performance computing, artificial intelligence, 5G, automotive electronics, etc., to provide customers with lighter and thinner chip manufacturing with faster data transmission rate and lower power loss Solution.

Furthermore, in the semiconductor storage market, the company's packaging and testing services cover various memory chip products such as DRAM and Flash. It has more than 20 years of experience in mass production of memory packages, 16-layer NAND flash stacking, 35um ultra-thin chip manufacturing capabilities, hybrid stacking, etc., all of which are in a leading position in the domestic industry. 80% of Shengdi Semiconductor's shares were settled on September 28, 2024, which is conducive to expanding the company's market share in the field of storage and computational electronics, and laying a solid foundation for the company's leading position in the global storage market.

Investment advice

We adjusted the company's profit forecast for 2024-2026 (the original forecast was 2.02, 3, 3.57 billion yuan). The net profit due to mother for 2024-2026 is 1.64, 2.52, and 3.03 billion yuan, the corresponding EPS is 0.92, 1.41, 1.69 yuan, and the corresponding PE is 42.7, 27.7, and 23.1 times. Maintain an “Overweight” rating.

Risk warning

The test boom fell short of expectations, production expansion fell short of expectations, market competition intensified, and technology development fell short of expectations.