Crystal Integration released its report for the third quarter of 2024: In the first three quarters of 2024, the company achieved revenue of 6.775 billion yuan, a year-on-year increase of 35.05%, achieved net profit of 0.279 billion yuan, an increase of 771.94% over the previous year, and achieved net profit without deduction of 0.179 billion yuan, an increase of 243.91% over the previous year.

Key investment points

Full capacity helped Q3 performance. The company's gross margin increased markedly in the first three quarters of 2024. The company achieved operating income of 6.775 billion yuan, an increase of 35% year over year, mainly affected by the gradual recovery in industry sentiment. The company's product sales increased, and net profit to mother was 0.279 billion yuan, an increase of 771.94% year on year. In addition to the year-on-year increase in revenue, the company's capacity utilization rate remained high, unit sales cost decreased, and product gross margin increased year on year. The company's gross margin reached 25.56% in the first three quarters, up 6.6 percentage points year on year. Among them, gross margin for the third quarter reached 26.79%, up 2.93 percentage points from month to month, with a significant increase in profitability.

High-end CIS has become the direction of production expansion, and OEM price adjustments help increase revenue and profit

The company has now achieved mass production of 150nm to 55nm process platforms in terms of foundry process nodes. In the first half of 2024, 55nm, 90nm, 110nm, and 150nm accounted for 8.99%, 45.46%, 29.40%, and 16.14% of the main business revenue; judging from the application product classification, 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. CIS has risen to become the company's second-largest product spindle. Since March of this year, the company's production capacity has continued to be at full capacity, and plans to expand production by 0.03-0.05 million pieces/month. The process nodes mainly cover 55nm and 40nm, and the main direction of annual expansion of production will be the middle and high-end CIS. The expanded production capacity has been released one after another since August of this year, and production capacity will continue to be expanded in the fourth quarter, mainly in the middle and high-end CIS sector.

At the same time, the adjustment of OEM prices for some products in the second quarter was also conducive to increasing the company's operating income and product gross profit level.

Successful trial production of the industry's first 0.18 billion pixel full-frame CIS

Recently, the company and Starway jointly launched the industry's first 0.18 billion pixel full-frame CIS, which was successfully tested. This product is based on the company's self-developed 55nm process platform, and together with Stevie, it has successfully broken through the limit of how a single chip can cover a conventional light mask, while ensuring that in the nanoscale manufacturing process, the spliced chip still ensures the consistency of electrical and optical performance. The product has many leading features such as high frame rate and ultra-high dynamic range in 0.18 billion ultra-high pixel 8K 30FPSPixGain HDR mode. It can be adapted to various lenses, enhances flexibility in terminal applications, and provides more options for image sensors in high-end SLR cameras. The company continues to improve the layout of middle and high-end CIS products and enhance product diversification.

Profit forecasting

The company's revenue for 2024-2026 is 9.623, 12.522, and 14.888 billion yuan, respectively, EPS is 0.22, 0.35, and 0.50 yuan, respectively. The PE corresponding to the current stock price is 114, 73, and 51 times, respectively. The company's capacity utilization rate remains at full capacity, while actively expanding the production layout of mid-range and high-end CIS products. Revenue and profit are expected to continue to grow. For the first time, it is covered, giving it a “buy” investment rating.

Risk warning

Macroeconomic risks, risk of product development falling short of expectations, risk of increased industry competition, risk of downstream demand falling short of expectations.