GigaDevice(SH:603986) Guotai Junan Securities·2024-07-11 06:01Investment Rating - The report maintains an "Overweight" rating for the company, with an upgraded target price of 113.10 CNY, up from the previous forecast of 95.36 CNY [4][8]. Core Insights - The second quarter (Q2) performance exceeded expectations, indicating that the market bottom was reached in Q1. Demand continued to rise in Q2, leading to improved profitability due to price increases in storage products [8]. - The company is positioned at the bottom of the storage and MCU cycle, with production rates gradually increasing. Prices for SLC NAND and niche DRAM are rising moderately, benefiting from capacity expansion and new product iterations [8]. - The company reported a revenue of approximately 3.609 billion CNY for the first half of 2024, a year-on-year increase of 21.69%, and a net profit of around 518 million CNY, up 54.18% year-on-year [8]. Financial Summary - Revenue for 2024 is projected to be 7.343 billion CNY, with a year-on-year growth of 27.5%. Net profit is expected to reach 1.161 billion CNY, reflecting a significant recovery from the previous year's 161 million CNY [8]. - The company’s earnings per share (EPS) estimates for 2024, 2025, and 2026 have been revised to 1.74 CNY, 2.45 CNY, and 3.43 CNY respectively, up from previous estimates of 1.49 CNY, 2.28 CNY, and 3.24 CNY [8]. - The company’s market capitalization stands at 64.717 billion CNY, with a current price of 97.04 CNY and a price-to-earnings (PE) ratio of 55.75 for 2024 [5][8]. Market Trends - The report highlights a recovery in demand from the consumer and networking markets, which has positively impacted the sales and revenue growth of the company's storage chips [8]. - Price increases are expected to continue across various product lines, including niche DRAM and SLC NAND, driven by recovering demand and capacity transfers from larger manufacturers [8].