Core ideas:

According to the company's three-quarter report, in the first three quarters of 2024, the company achieved revenue of 4.263 billion yuan and net profit after deducting net profit of 0.878 billion yuan, or -54.37% year-on-year. Looking at the Q3 quarter alone, the company achieved revenue of 1.39 billion yuan in 24Q3, -27.25%, and -19.75%; net profit to mother 0.272 billion yuan, -57.30% YoY, -36.77% month-on-month; net profit after deducting 0.253 billion yuan, or -57.78% YoY and -36.59%. In terms of gross margin, the company's 24Q3 gross profit margin was 54.46%, year-on-year -7.54pct, and -3.68pct month-on-month.

Continue to lay out key areas and lead the industry. According to the company's semi-annual report, the company has been deeply involved in the field of integrated circuit design for more than 20 years and has become one of the leading domestic integrated circuit design companies. In terms of special integrated circuits, the company's FPGA products continue to maintain a leading position in the industry market. The newly developed special Nand Flash has been introduced to the market, and the development of new special memories has been completed; in terms of smart security chips and crystals, the company's market share has increased.

Continue to strengthen technological empowerment and enhance the company's core competitiveness. According to the company's semi-annual report, in terms of special integrated circuits, the company successfully developed and promoted new industrial-grade product lines and irradiation-resistant product lines, special memories, special special processors, special FPGAs and system-level chips; in terms of smart safety chips, the company established a vehicle-grade product development and management process system that conforms to the highest level of automotive functional safety “ASIL D”, developed Strongbox with Intel, and released the world's first eSIM solution specially customized for smart POS; in terms of crystals, small-size, high-frequency product development and industry Modernization continues to advance, and OSC differential ultra-high fundamental frequency products based on Q-MEMS have been mass-produced.

Profit forecasting and investment advice. The company's 24-26 EPS is expected to be 1.67, 2.42, and 3.09 yuan/share. Taking into account growth and profitability, refer to comparable companies, and give the company a 40x PE valuation in 2025, corresponding to a reasonable value of 96.85 yuan/share, giving it a “buy” rating.

Risk warning. The growth of the special integrated circuit industry falls short of the expected risks, the development progress of new projects falls short of the expected risks, and the downstream OEM production capacity falls short of the expected risks.