The boom in the memory market recovered, and the company's performance reversed: memory prices showed a relatively rapid upward trend in 2024. Trendforce estimates that the contract price of 2024Q1's two storage products will increase by 20% quarterly, and the quarterly price increase is expected to be > 13% in 2024Q2. Benefiting from the recovery in prosperity, the company's 2024Q1 revenue was 1,727 billion yuan, up 305.80% year on year; net profit to mother was 168 million yuan; 2024Q2 performance is also expected to continue to improve.

Deeply involved in the field of memory modules, the company has a diverse market: the company's product share ranks among domestic memory manufacturers, and its embedded storage products have entered mobile phone companies such as OPPO and Voice; SSD products have entered the supply chain of well-known domestic and foreign PC manufacturers such as Lenovo, Acer, HP, and Tongfang; in the field of smart wearables, it has developed customers such as Google, Xiaomi, Meta, and Little Genius; in the field of vehicle regulations, the company's products are being introduced to leading domestic car companies. The company's market share is expected to continue to grow.

Multi-sector layout to support high R&D investment: The company's IPO raised a total capital of 602 million yuan for the company's Huizhou project, advanced memory R&D center project, and supplementary working capital. The company lays out storage solution research and development, main control chip design, chip packaging and testing, etc., and explores fields such as integrated storage and computing, new interfaces, and new media. In 2023, the company invested 250 million yuan in R&D, accounting for 6.96% of revenue. By the end of 2023, the IPO fund-raising project had invested 487 million yuan, accounting for 93.15% of the promised investment.

Forward-looking layout of advanced packaging technology: On April 30, the company revised the fixed increase plan to raise no more than 1.9 billion yuan (including the number of copies). The net amount after deducting issuance fees will be used for the company's Huizhou Advanced Packaging and Testing and Memory Manufacturing Base expansion project and wafer-level advanced sealing and testing manufacturing project. The wafer-level advanced sealing and testing manufacturing project is located at Songshan Lake in Dongguan. It is a key industrial project in the Greater Bay Area and has already entered the implementation stage. This project aims to build the world's leading benchmark enterprise for advanced semiconductor packaging and testing, and is expected to contribute new impetus to the company's growth.

Investment advice: The company continues to expand new customers, and technology research and development is progressing steadily. In 2024-2026, we expect the company to achieve operating income of 60.32/81.92/8.954 billion yuan and net profit to mother of 466/5.94/632 million yuan. The corresponding PE value is 49.95/39.15/36.79 times, giving the first coverage a “gain” rating.

Risk warning: memory demand falls short of expectations; R&D progress falls short of expectations; increased industry competition; risk of RMB exchange rate fluctuations; large number of financial investors among original shareholders; risk of lifting the ban on restricted shares.