GREAT MICROWAVE(SH:688270) AVIC Securities·2024-11-01 10:36Investment Rating - The investment rating for the company is "Buy" with a target price of 33.79 CNY, indicating an expected return of over 10% relative to the CSI 300 index in the next six months [5][20][29]. Core Views - The company has shown stable revenue growth with a 7.01% increase in revenue for the first three quarters of 2024, reaching 182 million CNY. However, the net profit attributable to shareholders decreased by 63.79% to 14 million CNY due to increased competition and rising management costs [5][10]. - The company is focusing on the low-orbit commercial satellite market, with multiple product lines expected to achieve rapid growth in the medium to long term. The development of new products is ongoing, and the company is well-positioned to benefit from the increasing demand in this sector [11][19]. Summary by Sections Financial Performance - For the first three quarters of 2024, the company reported a revenue of 182 million CNY, a 7.01% increase year-on-year. The gross profit was 153 million CNY, remaining stable, while the net profit attributable to shareholders was 14 million CNY, down 63.79% [5][9]. - The company's gross margin was 84.11%, a decrease of 5.58 percentage points, and the net profit margin was 7.93%, down 15.50 percentage points [5][9]. Research and Development - The company maintained a high level of R&D intensity, with total R&D expenses of 95 million CNY for the first three quarters, an increase of 6.57%. However, R&D expenses in Q3 decreased by 26.20% year-on-year [9][10]. - The R&D expenses accounted for 51.86% of revenue, indicating a strong commitment to innovation despite short-term fluctuations in profitability [9][10]. Cash Flow and Inventory Management - The operating cash flow for the first three quarters was -6 million CNY, but it showed significant improvement compared to the previous year, with cash inflows of 204 million CNY, up 20.65% [10]. - The company is actively managing its inventory, with stock levels increasing by 13.41% to 123 million CNY, and accounts payable rising by 98.20% to 66 million CNY, indicating proactive production planning [10]. Market Position and Future Outlook - The company is strategically targeting the low-orbit commercial satellite market, with new product developments in power management chips and RF transceiver chips expected to drive future growth [11][19]. - The anticipated growth in the defense information technology sector and the gradual application of three-dimensional heterogeneous microsystems are expected to further enhance the company's revenue and profit stability [19]. Share Buyback Announcement - The company announced a share buyback plan, reflecting confidence in its long-term business development and aiming to align the interests of executives and core employees with those of shareholders [16].