Incidents:

Jingfang Technology released its report for the third quarter of 2024. The company achieved operating income of 0.83 billion yuan in the first three quarters of 2024, +21.71% year on year; net profit to mother was 0.184 billion yuan, +66.68% year over year.

Comment:

Downstream prosperity has increased, and the company's profits have grown rapidly. The company achieved revenue of 0.295 billion yuan in 2024Q3, up 0.09% month-on-month; gross sales margin was 43.94%, -0.27pct month-on-month. Revenue and gross sales margin remained at the same level as Q2, and remained at a high level, mainly due to the increase in the company's packaging orders and shipments. At the same time, the company achieved net profit of 0.074 billion yuan in 2024Q3, an increase of 22.30% over the previous month. The increase in net profit to mother was mainly due to a reduction in the company's 2024Q3 financial expenses.

Market growth+core technology iteration brings new volume. With the recovery of smart phones, security and other fields, the rise of smart cars, and the rapid penetration of emerging fields such as drones and AR/VR, the smart sensor market that the company focuses on is also showing a recovery trend. According to Yole data forecasts, the global image sensor (CIS) market is expected to further grow to 28.8 billion US dollars by 2028, with a compound growth rate of 5.1% from 2022 to 2028. At the same time, the company continues to break through in core technology. As a pioneer and leader in the global application of wafer-level chip size packaging (WLCSP) in the field of sensors represented by image sensors, the company continues to innovate key processes such as wafer-level, silicon through-hole (TSV), and 3D RDL to grasp the ever-changing innovation needs of the industry and market. Market growth combined with technological iteration is expected to bring the company's performance to a new high.

Continue to develop product application markets and expand customers at home and abroad. Over the years, the company has insisted on technological innovation as an entry point to develop application markets such as CMOS, MEMS, biometrics, 3D, AR/VR, automotive electronics, and RF. At the same time, the company continues to expand its core customer base, covering world-renowned sensor design companies such as SONY, Howell Technology, Gekowei, and Starway. On June 28, 2024, the company announced that it will establish a company in Malaysia through its Singaporean subsidiary OPTIZPIONEER with wholly-owned shares. At present, the Malaysian subsidiary has completed the registration process, and the proposed investment amount for the project is 80 million US dollars.

Profit forecast and investment advice: We expect the company's revenue for 2024-2026 to be 1.14/1.53/1.94 billion yuan, respectively, and net profit to mother 0.27/0.39/0.5 billion yuan, respectively, and the corresponding PE is 61x/43x/33x, respectively. Give it an “gain” rating.

Risk warning: Industry recovery falls short of expectations; technology research and development falls short of expectations.