Incident: On August 28, the company released the “2024 Semi-Annual Report”, achieving operating income of 0.541 billion yuan, +5.38% year-on-year; net profit attributable to shareholders of listed companies -0.026 billion yuan, or -716.60% year-on-year.

Investment income decreased and amortization increased, putting pressure on the company's short-term profitability: looking at 2024Q2 alone, the company achieved revenue of 0.348 billion yuan, +4.92% year over year, and realized net profit of 0.012 billion yuan, or -68.83%; consumer electronics terminal product innovation has not reached the inflection point. It is expected that the next two years will usher in a high boom and short-term pressure. The company's 2024H1 gross margin/net margin of 38.88/ -4.85%, compared to +0.68/-5.68pct. This is the sale of 1.33% of the shares in the subsidiary Silicon Semiconductor in the same period last year. Investment income decreased year-on-year, and the fixed asset depreciation expenses increased this year due to the transformation of construction projects under construction last year.

Diversified expansion, and various business segments are progressing smoothly: 1) PCB sector: the company's 4 product matrices have been formed, and 2024H1 orders are growing rapidly as the industry recovers; 2) Semiconductor sector: Sixing Semiconductor, a participating subsidiary of the company, is providing wafer testing and equipment verification for TB1000 (65nm) and TB1500 (40nm) devices to many fabs. MueTec, a wholly owned German subsidiary, completed the development of 40nm process node overlay (overlay) measurement upgrade products and officially released them Market launch; 3) Intelligent driving sector: The company set up wholly-owned subsidiaries to focus on sectors such as intelligent driving, physical intelligence, and low-altitude economy, or introduce industrial investment to promote development while deepening cooperation with Horizon. On the basis of J5 chip cooperation, it became the first four mass production partners of the Horizon 2024 J6 chip platform.

Investment advice: We believe that the company's basic market is expected to recover upward as the inflection point of consumer electronics product innovation approaches, and at the same time diversified layout, and is also expected to blossom a little more. The company is expected to achieve operating income of 1.854/2.468/3.037 billion yuan and net profit to mother of 2.63/3.22/406 billion yuan in 2024-2026. The corresponding PE was 26.74/21.86/17.31 times, respectively, maintaining the “gain” rating.

Risk warning: risk that downstream prosperity falls short of expectations, risk of new product development falling short of expectations, risk of deteriorating competitive landscape, risk of exchange rate fluctuations