GigaDevice(603986) 国元证券·2024-06-30 06:02Investment Rating - The report assigns a "Buy" rating to the company, with a target price of 101 RMB under neutral conditions and 126 RMB under optimistic conditions [2][10][11]. Core Viewpoints - The company is expected to benefit from the exit of major overseas manufacturers from the DDR3 market, leading to a price increase in niche DRAM products. The company has shifted towards its own DRAM production, which is anticipated to enhance gross margins [2][11]. - The recovery of Nor Flash inventory and supply-demand mismatch is expected to drive product price increases. The demand for Nor Flash is projected to rise due to the recovery in consumer electronics and the increasing capacity requirements in various applications [2][11][19]. - The demand release for SLC NAND is expected to boost prices, with the company expanding production to meet orders from domestic major clients [3][11]. - The automotive sector is anticipated to recover, with the introduction of new MCU products aimed at artificial intelligence applications [12][28]. Summary by Sections Investment Logic Changes - The exit of major players from the DDR3 market is creating a capacity gap, leading to price increases for niche DRAM. The company has been reducing its reliance on DRAM agency sales since launching its own brand in 2021, which is expected to improve gross margins [2][11]. - The Nor Flash market is experiencing a recovery in inventory levels, with demand expected to rise in the second half of 2023 and into 2024, driven by various applications including automotive and consumer electronics [2][11][19]. - The company is expanding its SLC NAND production to capture market share from domestic clients, leveraging its competitive pricing and performance [3][11]. Financial Data and Valuation - The company is projected to achieve total revenue of 7,436 million RMB in 2024, representing a growth rate of 29.1% compared to 2023. The net profit is expected to reach 1,097 million RMB, reflecting a significant increase of 580.7% [4][10]. - The report provides a valuation of 77x for optimistic scenarios and 62x for neutral scenarios, with corresponding target prices of 126 RMB and 101 RMB [4][10][11]. Company Overview - The company is a leading semiconductor manufacturer in China, specializing in memory products such as NOR Flash, SLC NAND, and DRAM. It ranks as the second-largest NOR Flash manufacturer globally and the top supplier of 32-bit ARM MCUs in China [32][34].