Guilun Electronics released three quarterly reports. In Q1-Q3 of 2024, revenue of 0.279 billion yuan (yoy +25.74%), net profit of -0.057 billion yuan (same period last year -0.029 billion yuan), and deducted non-net profit of -0.043 billion yuan (-0.037 billion yuan for the same period last year). Excluding share payments, net profit to mother was -0.039 billion yuan, after deducting non-0.025 billion yuan; 24Q3 achieved revenue of 0.083 billion yuan (yoy +19.34%, qoq -27.25%), and net profit to mother of -0.016 billion yuan (-0.029 billion yuan for the same period last year). In 24Q3, the company's EDA software revenue increased, loss decreased year on year, and maintained a “buy” rating.

The promotion of design EDA went smoothly, and EDA tool licensing revenue increased

24Q1-Q3's EDA tool licensing business revenue was 0.278 billion yuan, up 25.9% from the same period. Among them, integrated circuit design EDA revenue was 0.111 billion yuan, up 74.7%; IC manufacturing EDA revenue was 0.081 billion yuan, an increase of 13.3%; EDA tool licensing revenue in the 24Q3 single quarter was 0.055 billion yuan, an increase of 32.5%. The 24Q3 growth rate of the company's EDA tool licensing business was faster than in the first three quarters. The company has design platform products, and the entire DTCO manufacturing EDA process for process development and the entire EDA process for design such as memory were basically formed. It is optimistic that EDA tool software will drive the company's revenue to continue to grow rapidly.

Domestic market expansion is smooth, providing impetus for revenue growth

24Q1-Q3's revenue from outside the EDA tool licensing business was 0.087 billion yuan, -0.6% year-on-year. Among them, the semiconductor device characteristic testing system business achieved revenue of 0.054 billion yuan and the technology development solution business revenue of 0.033 billion yuan. By region, 24Q1-Q3's domestic revenue was 0.192 billion yuan, an increase of 39.9%. Domestic revenue accounted for 68.9%, and revenue from overseas was 0.087 billion yuan, an increase of 3.3%. Among them, the 24Q3 single quarter came from domestic revenue of 0.059 billion yuan, an increase of 31.3% over the same period. With the smooth expansion of the company's domestic market, the company's revenue growth momentum has been further enriched.

R&D investment increased year-on-year, and products continued to iterate

The overall gross margin of 24Q1-Q3 was 90.26%, a year-on-year change of +8.02pct. Sales/management/R&D expenses rate was 24.20%/15.99%/67.25%, -1.99pct/-2.65pct/-0.22pct year-on-year. R&D investment was 0.199 billion yuan, up 32.5% from the same period, accounting for 71.1% of revenue, +3.65pct year on year. In September 2024, the company released an automated mask design platform and advanced lithography process simulation tools. The manufacturing EDA category is further enriched. As products continue to be iterated, it is expected to further enhance market competitiveness.

Profit forecasting and valuation

We expect the company's revenue for 2024-2026 to be 0.414/0.525/0.672 billion yuan, and EPS of -0.10, -0.07, 0.04 yuan (maintaining the previous value). Comparable to the 2025 Wind, the average PS is expected to be 17.8 times. Considering that the company has global competitiveness in terms of international customers, 20 times PS was given in 2025, with a target price of 24.20 yuan (previous value of 17.19 yuan), maintaining a “buy” rating.

Risk warning: R&D results fall short of expectations; market competition intensifies.