Loongson Technology(688047) Guoxin Securities·2024-09-10 00:30Investment Rating - The investment rating for Longxin Zhongke (688047.SH) is "Outperform the Market" [1][4][16]. Core Views - The company reported a revenue decline of 28.7% year-on-year in the first half of 2024, with a significant drop of 47.5% in the second quarter. The total revenue for 1H24 was 220 million yuan, with 100 million yuan in 2Q24 [1]. - The net profit for 1H24 was -238 million yuan, indicating a loss compared to the previous year, with a net profit margin under pressure due to macroeconomic factors and changes in sales strategy [1]. - The gross margin for 1H24 was 29.67%, down 6.24 percentage points year-on-year, primarily due to decreased contributions from the industrial control business [1]. - The company has seen a recovery in sales of information technology chips, with revenue from this segment reaching 109 million yuan, a year-on-year increase of 186.98% [1]. - The investment recommendation has been adjusted to reflect a more conservative outlook, with projected revenues for 2024-2026 at 604 million, 936 million, and 1.296 billion yuan respectively [1]. Summary by Sections Financial Performance - 1H24 revenue was 220 million yuan, down 28.68% YoY, with 2Q24 revenue at 100 million yuan, down 47.53% YoY and 17.01% QoQ [1][2]. - 1H24 net profit was -238 million yuan, with a 2Q24 net profit of -163 million yuan [1][2]. - Gross margin for 1H24 was 29.67%, with a 2Q24 gross margin of 28.38% [1][2]. Product Segmentation - Chip product revenue totaled 163 million yuan in 1H24, with industrial control chip revenue at 54 million yuan (down 51.86% YoY) and information technology chip revenue at 109 million yuan (up 186.98% YoY) [1][2]. - Solution revenue was 56 million yuan, down 64.14% YoY, reflecting a strategic shift away from complete machine solutions [1]. Future Outlook - The company is expected to gradually improve as industry cycles change, with new information technology chip products driving growth in desktop products [1]. - Adjusted revenue forecasts for 2024-2026 are 604 million, 936 million, and 1.296 billion yuan, with net profits projected at -156 million, 1 million, and 95 million yuan respectively [1][2].