Non-net profit deducted in the 24Q3 quarter was +1.2 times year-on-year, benefiting from increased DDR5 penetration rate+the increase in new AI products.

Revenue for the first three quarters was 2.571 billion yuan, +68.6% year over year, net profit to mother of 0.978 billion yuan, +318.4%, after deducting non-net profit of 0.874 billion yuan, +460.9% year over year; the main benefits were the restorative growth in demand for memory interface and module supporting chips, increased DDR5 penetration rate, and the release of new AI chips.

24Q3 quarterly revenue of 0.906 billion yuan, -2.4% month-on-month, net profit of 0.385 billion yuan, +4.1% month-on-month after deducting non-net profit of 0.33 billion yuan, +1.5% month-on-month; gross profit margin 58.74%, +0.91pct month-on-month, net profit margin 42.30%, +2.45pct month-on-month, net profit margin 36.38%, month-on-month +1.38pct. The month-on-month increase in deducted non-net interest rate in the 24Q3 quarter was mainly due to a 0.91 pct increase in gross margin in Q3.

Q3 quarterly interconnect chip revenue hit a quarterly high. Stuck? Server platform revenue was -40.3% month-on-month.

1) The largest business is interconnect chips, with revenue of 2.377 billion yuan in the first three quarters of 24, +59.4% year-on-year.

Among them, 24Q3 had revenue of 0.849 billion yuan in a single quarter, a quarterly high of +46.0% year over year and +1.8% month over month, accounting for 93.7% of total revenue, gross profit margin of 62.21%, and -1.47 pct.

2) Is the second largest business out of power? The server platform had revenue of 0.185 billion yuan in the first three quarters of 24, +5.7 times the previous year. Among them, 24Q3 revenue in a single quarter was 0.055 billion yuan, or -40.3% month-on-month, accounting for 6.0% of total revenue.

New DDR5 products continued to grow iteratively, and DDR5 memory interface chip shipments in the Q3 quarter surpassed DDR4.

As of 24Q3, the company's shipments of DDR5 memory interface chips in a single quarter surpassed DDR4 memory interface chips, and shipments of DDR5 second-generation memory interface chips surpassed first-generation products. As of 24H1, the company's third-generation RCD chips are expected to be shipped on a 24H2 scale, and DDR5 fourth-generation RCD chips have been sent to memory module manufacturers. As DDR5 penetration increases and new DDR5 products are iteratively released, performance growth can be expected.

Benefiting from the AI wave, PCIe Retimer chip shipments doubled month-on-month to over 0.6 million units in the Q3 quarter.

The company's three new high-performance “capacity” chips were rapidly released. The total revenue for the Q2 quarter was about 0.13 billion yuan, and Q3 achieved a slight increase over the previous month. Among them, benefiting from strong demand for AI servers around the world and the increase in the company's market share, PCIe Retimer chip shipments more than doubled to more than 0.6 million units in the Q3 single quarter, a further significant increase over the previous month. As new products are gradually added in the future, it is expected to drive the company's future performance growth.

The leading domestic memory interface chip maintains an “gain” rating.

As a leading domestic memory interface chip, the company will fully benefit from the increase in DDR5 penetration rate and the AI wave. Furthermore, the domestic CPU market space is large, the proportion of domestic manufacturers is still low, and the company has broad room for future growth. The company's net profit from 2024 to 2026 is expected to be 1.327/1.968/2.573 billion yuan, respectively, corresponding to 24/25/26 PE of 65/44/34 times, maintaining an “increase in holdings” rating.

Risk warning: risk of global trade friction; risk of product development; risk of customer concentration; risk of falling inventory prices.