The company achieved revenue of 1.624 billion yuan (yoy: +7.7%, qoq: -0.9%), a record high for the same period, with net profit of 0.232 billion yuan (yoy: +79.5%, qoq: -1.3%), net profit of 0.214 billion yuan (yoy: +96.7%, qoq: -3.7%). Consumer markets such as TV and AIOT recovered moderately in the third quarter. The company's T/A series revenue maintained year-on-month growth, but overall revenue was still hampered by weak demand for set-top SoC purchases from domestic operators. In addition, due to the depreciation of the US dollar, the company experienced an exchange loss of 37.31 million yuan (1H24 exchange income of 28.51 million yuan) in 3Q24, but thanks to the increase in gross margin brought about by cost optimization and the effectiveness of cost-side control, net profit to the mother only declined slightly from month to month. If the impact of exchange gains and losses is excluded, the company's 3Q24 operating profit may have increased month-on-month. Looking ahead, the overseas market share of the company's set-top box and TV business is expected to continue to increase. At the same time, WiFi chips are expected to achieve supporting sales with main control chips to drive a rapid increase in sales. The target price is 99.8 yuan, maintaining “purchase”.

3Q24 review: TV/AIOT demand has maintained steady growth, and gross margin improved significantly, 3Q24's revenue is +7.7%/-0.9% month-on-month. We expect the month-on-month decline mainly due to the fact that demand in the domestic set-top box market is still weak, but demand for TVs and AIOT continued a moderate recovery trend in the first half of the year, and TV SoC sales performance in China was outstanding. The 3Q24 company's gross profit margin was 38.22% (yoy: +2.24pct, qoq: +1.88pct). The month-on-month improvement mainly benefits from: 1) OEM cost optimization, 2) cost control (including logistics/warehousing, etc.) gradually showing results. We expect that the gross margin improvement due to supply chain cost optimization may be further reflected in 4Q24. In terms of expenses, the company maintained a pace of fee control throughout the year. The total amount of 3Q24 fees (business+management+R&D) was 0.4 billion yuan (yoy: -1.54%, qoq: -0.84%), of which R&D expenses were 0.345 billion yuan, which was basically the same as the same as the previous month. However, due to the depreciation of the US dollar, 3Q24 had an exchange loss of 37.31 million yuan, which had a certain impact on net profit returning to mother.

4Q24&2025: Steady increase in overseas share. Focus on the development of Wi-Fi 6 products in 2024. The steady increase in the overseas market share of the company's TV, set-top box and other businesses provided the main impetus for its performance growth. Looking ahead, we are optimistic that the company's various product businesses will work together to drive continued steady growth in performance. Among them, 1) set-top boxes: new 6nm products help continue to expand new overseas markets. At the same time, the domestic share remains stable. The subsequent launch of China Mobile set-top box tenders is expected to drive a recovery in domestic set-top box demand; 2) TV: The company's overseas TV SoC market penetration is still in the early stages, and it is expected to continue to increase overseas market share with domestic TV brands; 3) Wi-Fi: Product rapid iteration, breaking through the domestic operator market for the first time with SoC sales; 4) AIoT:

Deepening cooperation with leading overseas companies is expected to fully seize the opportunities for end-side AI implementation.

Investment suggestion: The target price is 99.8 yuan. Maintaining the “purchase” rating, the company's OEM cost optimization and cost control drive significant results. We expect the company's net profit to be 0.84/1.195/1.544 billion yuan in 24/25/26. The company is the core supplier of domestic set-top boxes and TV SoCs, leading the competitive advantage in the market, but considering that operators' procurement requirements for set-top boxes are still unclear, the target price is 99.8 yuan, “buy”.

Risk warning: New product development falls short of expectations, market competition intensifies, and market development falls short of expectations.