Zheng Quan Zhi Xing·2025-07-07 16:23Core Viewpoint - The report discusses the financial performance and inventory management of Dongxin Semiconductor Co., highlighting the growth in inventory and the reasons behind it, as well as the company's gross margin performance across different product lines and regions. Inventory Management - As of the end of 2024, the company's inventory balance was 1.1213 billion yuan, an increase of 2.09% compared to the previous year, with a decrease in inventory impairment provisions by 33% to 229 million yuan [1][2] - The increase in inventory is attributed to the cyclical nature of the storage chip industry, where product prices and inventory levels are significantly affected by supply and demand dynamics [2][3] - The composition of inventory includes raw materials, processing materials, and finished goods, with raw materials increasing by 10.67% year-on-year [3][4] Comparison with Industry Peers - The inventory scale of Dongxin Semiconductor is compared with peers like Zhaoyi Innovation and Puran, showing that Dongxin's inventory growth aligns with industry trends, although its business scale is smaller relative to its inventory [6][8] - The company’s inventory turnover and management strategies are in line with industry practices, indicating a proactive approach to inventory management [7][8] Gross Margin Analysis - The company reported a comprehensive gross margin of 13.99% for 2024, an increase of 2.42 percentage points year-on-year, with NAND product gross margin rising by 8.25% to 11.58% [13][14] - The increase in gross margin is attributed to improved product structure, operational efficiency, and better management of procurement costs [14][15] - The gross margin for different regions showed contrasting trends, with the Greater China region's gross margin increasing by 8.14% to 13.02%, while the non-Greater China region's gross margin decreased by 8.50% to 17.52% [13][19] Product Performance - NAND product sales increased significantly, with revenue rising by 54.49% year-on-year, driven by demand recovery in the network communication and consumer electronics sectors [15][16] - The average selling price and cost of NAND products decreased, reflecting competitive pricing strategies and improved inventory turnover [15][16] - The company’s DRAM products experienced a decline in gross margin due to strategic pricing adjustments and changes in product mix [17][18]