GigaDevice(603986) Ping An Securities·2024-10-27 13:15Investment Rating - The report maintains a "Recommended" rating for the company, indicating an expectation that the stock will outperform the market by 10% to 20% over the next six months [3][6][13]. Core Views - The company's operating performance is steadily recovering, with effective expansion in the DRAM business. In the first three quarters of 2024, the company achieved revenue of 5.65 billion yuan, a year-on-year increase of 28.56%, and a net profit of 832 million yuan, up 91.87% year-on-year [4][5]. - The company is increasing its annual related transaction amount for DRAM products, raising the expected transaction amount with Changxin Storage from 120 million USD (approximately 852 million yuan) to 140 million USD (approximately 995 million yuan) due to current business development needs [5]. Summary by Sections Financial Performance - For 2024, the company is projected to have an EPS of 1.79 yuan, with corresponding P/E ratios of 49.7, 37.0, and 29.2 for the years 2024, 2025, and 2026 respectively [3][6]. - The company reported a gross margin of 39.46% in the first three quarters of 2024, an increase of 5.08 percentage points year-on-year, and a net margin of 14.73%, up 4.86 percentage points year-on-year [5]. Revenue and Profitability - The company's revenue for 2022 was 8.13 billion yuan, which decreased to 5.76 billion yuan in 2023, but is expected to recover to 7.40 billion yuan in 2024, reflecting a year-on-year growth of 28.4% [3][9]. - The net profit is projected to rise significantly from 161 million yuan in 2023 to 1.195 billion yuan in 2024, indicating a year-on-year growth of 641.3% [3][9]. Market Position and Strategy - The company is actively responding to market demand changes, with a focus on the industrial, storage, and computing markets, which are experiencing inventory reductions [5]. - The DRAM business is expected to become a significant new growth curve for the company, supported by increased resource investment [5].