occurrences

The company released its report for the third quarter of 2024. In the first three quarters, the company achieved revenue of 0.266 billion yuan, an increase of 61.44% over the previous year; net profit to mother was -0.14 billion yuan.

Key investment points

The new product market showed strong performance, and sales continued to grow. The company's new products are gradually being released and downstream customer inventories are gradually being eliminated. From January to September 2024, the company achieved operating income of 0.266 billion yuan, an increase of 61.44% over the previous year, and officially entered the second round of R&D harvest. Looking at a single quarter, Q3 achieved revenue of 0.111 billion yuan, and achieved several new quarterly highs, including a new high in single quarter revenue since the company was founded, a new high chip shipment volume in a single quarter since the establishment of the company, and a new quarter revenue high for the company's 7 major new products. It is expected that Q4 revenue will continue to grow, achieving the 8th consecutive quarter of month-on-month revenue growth for major products.

Adhere to investment in R&D, and products enter the middle and high-end fields. In the first three quarters, the company invested 0.201 billion yuan in R&D, an increase of 23.54% over the previous year, accounting for 75.59% of revenue. As R&D investment continued to increase, the company's products moved towards the middle and high-end fields. Q3 has launched a new 2-port gigabit Ethernet switch chip, which can meet the needs of multi-scene Ethernet switching and access in homes, enterprises, security, industrial control, intelligent networking, etc., and has now begun to be shipped in small batches. Samples of automotive Ethernet switch chips have already begun to be sent to some customers for testing. In the future, they will be used with automotive Ethernet physical layer chips that have already been mass-produced to provide greater convenience and uniformity to customers' needs for overall automotive Ethernet solutions. It is expected that 2027-2028 will usher in a period of market explosion.

Investment advice:

We expect the company's 2024-2026 net profit to be -0.18/-0.14/0.02 billion yuan, maintaining a “buy” rating.

Risk warning:

Market recovery falls short of expectations; competitive landscape increases risk; product development and technological innovation fall short of expectations; customer introduction falls short of expectations.