Loongson Technology(SH:688047) Huachuang Securities·2024-05-07 08:32Investment Rating - The report maintains a "Strong Buy" rating for the company, expecting it to outperform the benchmark index by over 20% in the next six months [2][5][17]. Core Views - The company is currently facing short-term pressure on performance but is increasing R&D investment to navigate a new round of business transformation [4][5]. - The transition period from a policy-driven market to an open market is crucial for the company, with a focus on enhancing the cost-performance ratio of its general-purpose CPUs and developing competitive embedded/specialized CPU chips [4][5]. Financial Performance Summary - In 2023, the company reported total revenue of 506 million, a year-on-year decrease of 31.54%, and a net profit attributable to shareholders of -329 million, down 736.57% [3][4][6]. - For Q1 2024, the company achieved revenue of 120 million, a year-on-year increase of 1.62%, while the net profit attributable to shareholders was -75 million, a slight decrease of 0.03 million compared to the previous year [3][4]. - The gross margin for the main business in 2023 was 36.04%, down 11.14 percentage points year-on-year [4]. Revenue and Profit Forecast - Revenue projections for 2024-2026 are 714 million, 1,002 million, and 1,384 million, representing year-on-year growth rates of 41.1%, 40.3%, and 38.2% respectively [5][6]. - Expected net profit attributable to shareholders for 2024-2026 is -96 million, 2 million, and 81 million, with significant growth rates of 71%, 102.3%, and 3571.9% respectively [5][6]. Market and Product Insights - The company’s revenue from industrial control chips in 2023 was 162 million, down 41.21% year-on-year, while revenue from information technology chips decreased by 51.23% to 92 million [4]. - The company aims to enhance its product offerings and market presence by focusing on both policy-driven and open markets, emphasizing a dual approach to business strategy [4][5].