Revenue for the first three quarters was +55.6% YoY, after deducting non-net profit +76.9% YoY. The performance was impressive.

Revenue for the first three quarters of 24 years was 6.137 billion yuan, +55.6% YoY, net profit to mother was 1.526 billion yuan, +69.2% YoY, after deducting non-net profit of 1.475 billion yuan, +76.9% YoY.

24Q3 single quarter revenue of 2.374 billion yuan, +9.3% month-on-month, net profit of 0.672 billion yuan month-on-month, +19.0% month-on-month after deducting non-net profit of 0.657 billion yuan, +20.4% month-on-month; gross profit margin 69.13%, +5.30pct month-on-month, net profit margin 37.12%, -1.19pct month-on-month, net profit margin 27.69%, +2.55pct month-on-month increase in Q3 gross margin Caused by 5.30pct.

Driven by the dual demand of Xinchuang+AI, the H2 Haiguang CPU and DCU business is expected to continue to grow in volume.

1) The largest business is high-end processors (including Haiguang CPU and Haiguang DCU), with 24H1 revenue of 3.76 billion yuan, accounting for 99.9% of total revenue and 63.43% gross profit margin. Considering that the company's product competitiveness is leading in the market and demand in the Q3 market continues to increase, the H2 Haiguang CPU and DCU business is expected to continue to expand with the support of Shincuang and AI as demand for AI computing power continues to expand. 2) The second largest business is technical services, with 24H1 revenue of 0.003 billion yuan, accounting for 0.1% of total revenue and a gross profit margin of 57.55%.

The DCU deep computing series products are progressing smoothly, and high-end processor products have cooperated with brands such as Inspur and Lenovo.

The company's high-end processor products have been widely recognized by customers in many domestic industries, and have established cooperative relationships with well-known server brands such as Inspur, Lenovo, Xinhuasan, and Tongfang. 1) On the DCU side: Haiguang DCU is compatible with a “CUDA-like” environment, can support full-precision model training, realize the full application of large models represented by LLama, GPT, Bloom, ChatGLM, etc., and is fully compatible with domestic models, including Wenxin's words, and the performance has reached the leading level in China. The company has achieved commercial sales of Shenzhen Computing No. 2 products, and R&D of Shenzhen Computing No. 3 is progressing smoothly. At the same time, the company and leading Internet vendors have launched a joint plan to build a full-stack AI infrastructure with software and hardware produced nationwide, which is expected to continue to benefit from the increase in demand for AI computing power. 2) On the CPU side:

According to IDC data, the 24H1 Chinese server CPU localization rate is about 20%. The Haiguang CPU is compatible with mainstream international x86 processor architectures and technology routes. It has the advantages of excellent system architecture, high reliability and high security, and rich software and hardware ecology, and is expected to continue to benefit from the autonomous and controllable process of domestic chips.

The leader in domestic computing power chips, covered for the first time, and gave it an “increase in weight” rating.

As a leader in domestic computing power chips, the company is in a leading position in the country in the field of CPU and DCU chip technology. As the localization penetration rate of “Xinchuang+ Computing Power” continues to increase, there is broad room for future growth. The company's net profit from 2024 to 2026 is estimated to be 1.991/2.86/3.85 billion yuan respectively, corresponding to PE 181/126/94 times in 24/25/26, covered for the first time, giving it an “increase in wealth” rating.

Risk warning: R&D falls short of expectations; risk of high customer concentration; risk of high supplier concentration and difficulty in replacing some suppliers; intellectual property risk, etc.