Crystal Integration announced its 2024 three-quarter report. Revenue and profit improvements for the first three quarters of 2024 were significant on the revenue and profit side: in the first three quarters of 2024, the company achieved operating income of 6.775 billion yuan, an increase of 35.05% over the same period in 2023; net profit attributable to shareholders of listed companies was 0.279 billion yuan, an increase of 771.94% over the same period in 2023. In the third quarter of 2024, the company achieved operating income of 2.377 billion yuan, a year-on-year increase of 16.12%; Q3 net profit of 91.93 million yuan, a year-on-year increase of 21.60%; and net profit of non-return to mother of 84.7 million yuan in Q3, an increase of 293% year-on-year.

The increase in the company's revenue is mainly due to a gradual recovery in industry sentiment and an increase in sales volume. The sharp increase in net profit attributable to mother and net profit deducted from non-mother was mainly due to the year-on-year increase in the company's operating income, maintaining a high level of capacity utilization, falling unit sales costs, and a year-on-year increase in product gross margin.

The company continues to increase investment in R&D to consolidate product technical advantages

The company voluntarily disclosed the progress of new product development on October 10, 2024. The company continues to strengthen its technical capabilities and develop a 28 nm logic chip process platform based on existing technology. The company works closely with strategic customers to verify the simultaneous function of the digital module and analog module in the chip to ensure the performance and stability of the process platform. At present, the 28 nm logic chip has passed functional verification and successfully lights up the TV.

The company's 28 nm logic platform has a wide range of applicability and can support the development and design of various application chips including TCON, ISP, SoC, WIFI, and Codec. Subsequently, the company plans to further improve the performance and product power consumption of the 28 nm logic chip to meet the market's demand for high-performance and high-stability chip design solutions.

The 28 nm logic chip successfully passed functional verification, laying the foundation for the company's subsequent smooth mass production of 28 nm chips, further enriching the company's product structure and helping the company continue to develop steadily. In the future, the company will continue to increase investment in technology research and development to comprehensively enhance the company's core competitiveness.

The display panel is an important component for information display. DDIC is the core chip for display panels. The company's main OEM product is DDIC, and also expands the crystal integration of CIS, MCU, PMIC and other process platforms to mainly engage in 12-inch wafer foundry business to provide customers with Panyuan OEM services for DDIC and other process platforms. The main application area of the company's foundry service products is mainly panel display driver chips. The company's 150nm-90nm LCD display driver chip technology was improved and optimized on the basis of Lipin Technology's technology transfer technology, and formed after innovation and upgrading.

Looking at the process foundry platform, DDIC foundry for display driver chips is the company's main source of revenue.

Looking at the product classification for the first half of 2024, DDIC, CIS, PMIC, MCU, and Logic accounted for 68.53%, 16.04%, 8.99%, 2.44%, and 3.82% of the main business revenue, respectively. Among them, CIS accounted for a significant increase in the proportion of main business revenue, becoming the company's second-largest product spindle, and CIS production capacity is at full load.

The company's main revenue comes from 150nm to 90nm technology nodes. 55nm technology nodes account for a rapid increase in revenue. Judging from the process node classification in the first half of 2024, 55nm, 90nm, and 110nm.150nm accounted for 8.99%, 45.46%, 29.40%, and 16.14% of the main business revenue, respectively. Compared to the first half of 2023, the company's 90nm process and below accounted for 95.17% of the company's overall revenue in the first half of 2023. Among them, the 90nm process is the company's core main revenue, reaching 1.477 billion yuan accounting for 49.92%, 110nm process revenue of 0.936 billion yuan accounting for 31.65%, and 150nm process revenue of 0.402 billion yuan, accounting for 13.60%. The company's more advanced 55nm process revenue was 0.143 billion yuan, accounting for 4.83%.

Investment advice

We expect the company's 2024-2026 revenue to be 10.084 billion/12.931 billion/15.165 billion yuan, respectively. Net profit attributable to mother was 0.599 billion/0.995 billion/1.416 billion yuan, corresponding EPS was 0.30/0.50/0.71 yuan, corresponding PE was 71/43/30 times, respectively, maintaining the “gain” rating.

Risk warning

Consumer electronics demand is weak, DDIC inventories are high, market competition is intensifying, and technology iteration falls short of expectations.