Incident review: The company issued an indicative announcement on profit distribution. The company achieved net profit attributable to shareholders of listed companies in the first three quarters of 2024 of 351,709,019.93 yuan. As of September 30, 2024, the parent company's distributable profit to shareholders was 1,255,203,096.39 yuan, with a capital reserve of 1,513,993,382.50 yuan. The above figures have not been audited. Based on the total share capital on the date of implementation of this profit distribution plan, a cash dividend of 2.50 yuan (tax included) will be distributed to all shareholders for every 10 shares. The total cash dividend is expected to be 104,575,200 yuan, and the capital reserve will not be increased. The total cash dividend is estimated to account for 29.73% of the net profit attributable to shareholders of listed companies in the company's consolidated statements for the first three quarters of 2024.

The “Geese Phalanx” continues to be rich, and the downstream demand space is broad: as a leading manufacturer in the domestic SOC industry, the company is committed to building a “goose shaped phalanx” chip and continuously improving the layout of a full range of chip products with “head geese” driving the “two wings” forward. Among them, the flagship chip RK3588 is the “head geese”, which has the characteristics of strong performance, high versatility, and rich IP integration, leading the company's chip platform to continue to break through in various fields of AIoT; IoT platforms with different performance and computing power levels and AIoT computing power platforms are arranged to form “two wings”, covering different downstream computing power needs in different fields and levels, and providing customers with diverse product solutions. In the past three years, the company has maintained a high level of R&D investment and continued to launch various new products such as RK3588, RK3576, RK3562, RK3506, RV1106/03, and RK2118. Currently, the company can provide downstream customers and ecosystem partners with AIoT chips with different computing power levels from 0.2TOps to 6TOps. Among them, the RK3588 and RK3576 have 6TOPs NPU processing units, which can support mainstream 0.5B to 3B parameter level model deployment on the end side, implement functions such as translation, summary, question and answer through large language models, and can effectively solve the pain points of different AIoT scenarios and enhance the product user experience. Currently, customers in various fields have developed new hardware that supports large AI models on the end side based on Rockchip microcontroller chips, such as AI learning machines, dictionary pens, smart speakers, desktop robot computing power terminals, and conference hosts. Robots are also one of the company's key product lines. The company already uses SoC chips in various forms of robot products, such as various industrial robots, service robots, warehousing and logistics robots, companion robots, entertainment robots, cleaning-related robots, such as weeding/snow shoveling robots, four-legged robots, etc. In terms of AI coprocessor chips, the company is currently developing smoothly. Regarding the future of the company, we maintain our early views: 1. After several years of introduction by market customers, products such as RK3588 are now expected to enter the demand release period; 2. The increase in sales revenue share of new material models is expected to further boost the company's gross sales margin and further increase the company's net sales interest rate; 3. Currently, AI technology is developing rapidly on the end side, and the implementation of AI on the end side is expected to further open up the company's future growth space.

Investment suggestion: Maintaining the previous forecast, the company's revenue for 2024-2026 is expected to be 3.052 billion yuan, 4.014 billion yuan, and 5.198 billion yuan, respectively. The net profit attributable to shareholders of listed companies in 2024-2026 is 0.52 billion yuan, 0.782 billion yuan, and 1.148 billion yuan, respectively. The corresponding PE is 53.6 times, 35.6 times, and 24.2 times, respectively, considering that the company is domestic Leading SoC listed companies are compounding the huge prospects of future human society's growing computing power requirements. Edge side AI can be expected to accelerate and maintain the buy-A proposal.

Risk warning: Risk of terminal market development falling short of expectations, risk of tight wafer production capacity and rising raw material prices, risk caused by increased industry competition, risk of new product introduction falling short of expectations.