Investment Rating - The report maintains a "Buy" rating for the company [6]. Core Insights - The company benefits from an upward storage cycle driven by AI, leading to continuous price increases in storage products. The demand for high-performance inference services is growing, and in the context of a supply-demand imbalance for traditional large-capacity HDDs, CSPs are shifting storage demand towards QLC Enterprise SSDs. The overall supply-demand situation has resulted in price increases for various NAND Flash products. The company is expected to hold the largest market share in NOR Flash and SLC NAND Flash products in mainland China in 2024, with a second-largest share in niche DRAM, benefiting from the storage industry cycle [2][3]. Revenue and Profit Growth - In the first three quarters of 2025, the company reported revenue of 6.832 billion yuan, a year-on-year increase of 20.92%, and a net profit attributable to shareholders of 1.083 billion yuan, up 30.18% year-on-year. The gross margin for the first three quarters of 2025 was 38.59%, a decrease of 0.87 percentage points, while the net profit margin increased by 1.45 percentage points to 16.17% [3][4]. Product Line Expansion - The company continues to enrich its product line, launching a dual-voltage SPI NOR Flash product specifically designed for 1.2V SoC applications, applicable in emerging fields such as smart wearables, healthcare, IoT, data centers, and edge AI. The company is one of the first to achieve mass production of 45nm node SPI NOR Flash. In the first half of 2025, the company introduced high-speed QSPI NAND Flash products with faster read speeds and bad block management features, applicable in industrial and IoT scenarios [3][4]. Niche DRAM Revenue Growth - The company's niche DRAM products are widely used in network communications, televisions, set-top boxes, smart homes, and industrial applications. In the first half of 2025, the promotion of the 8Gb DDR4 product was successful, leading to steady revenue growth, while LPDDR4 products began to contribute to revenue. With major overseas manufacturers exiting the niche DRAM market, supply is tight, resulting in increased revenue from niche DRAM products [4]. Profit Forecast and Valuation - The company is recognized as a leading player in the domestic niche storage market, benefiting from the upward storage cycle. The diversified product layout is expected to further open up incremental space. The net profit forecasts for 2025 and 2026 have been raised to 1.760 billion yuan and 2.551 billion yuan, respectively, reflecting increases of 9% and 22%. A new forecast for 2027 net profit is set at 2.911 billion yuan [4].

Group 1 - The Shanghai Stock Exchange Sci-Tech Innovation Board 100 Index rose by 1.93%, with notable gains from component stocks such as Yuanjie Technology (up 11.54%), Dongxin Co. (up 9.70%), and Guodun Quantum (up 9.48%) [1] - The Sci-Tech 100 ETF (Huaxia, 588800) increased by 1.96%, closing at 1.3 yuan, with an active trading volume of 3.13 billion yuan and a turnover rate of 11.72% [1] - The semiconductor materials and equipment theme index on the Sci-Tech Innovation Board rose by 1.43%, with significant increases from Shen Gong Co. (up 8.71%) and Jing Sheng Co. (up 7.04%) [1] Group 2 - Major companies like Lenovo, Dell, and HP are planning price increases, with hikes up to 20%, effective from January 1, 2026, due to rising costs of components such as memory chips, which account for 15%-18% of PC costs [1] - Haitong Securities reports that companies like SanDisk, Micron, and Samsung are issuing price increase notices, indicating a sustained upward trend in storage prices into Q4 2025, driven by increased demand from AI data centers [2] - The Sci-Tech 100 ETF closely tracks the Sci-Tech 100 Index, focusing on high-growth sectors including semiconductors, pharmaceuticals, and new energy [2]

Core Viewpoint - The report from Changcheng Securities indicates that Zhaoyi Innovation's non-GAAP net profit for Q3 2025 increased by 55% quarter-on-quarter, driven by an upward trend in the storage cycle, which positively impacts performance [1] Group 1: Company Performance - Storage is the main revenue segment for the company, with both volume and price increases in DRAM contributing significantly to growth [1] - The company is a leading designer of memory, microcontrollers, and sensor chips in China, ranking among the top globally in NOR Flash, SLC NAND Flash, niche DRAM, and MCU sectors [1] Group 2: Industry Outlook - The development of AI technology is propelling the storage industry into an upward cycle, providing substantial growth opportunities for the company [1] - Projected net profits for the company from 2025 to 2027 are estimated to be 1.727 billion, 2.452 billion, and 3.350 billion yuan, respectively, with corresponding PE ratios of 74, 52, and 38 times [1]

Core Viewpoint - The storage industry has entered an accelerated upward cycle driven by explosive demand from the AI era, with limited supply-side capacity leading to a widening supply-demand gap and accelerating price increases [2][4][6]. Group 1: Demand Drivers - The current upward cycle in the storage industry is primarily driven by the explosive demand from AI servers and multimodal applications, marking a shift from traditional demand sources like smartphones and internet companies [3][4]. - Flash storage demand is expected to grow significantly, with data center storage needs projected to increase from 600EB in 2020 to 2.4ZB by 2028, driven by generative AI [4][8]. - The Sora2 model exemplifies the increased storage requirements, consuming nearly 100MB for a 10-second 4K video, a substantial increase compared to traditional text storage needs [11]. Group 2: Supply-Side Dynamics - Storage manufacturers are focusing capital expenditures on high-margin products like HBM, with limited plans for significant NAND Flash capacity expansion, leading to a constrained supply environment [31][34]. - Major manufacturers like Samsung, SK Hynix, and Micron are reporting record revenues and profit margins, indicating strong demand and effective inventory management [5][43]. Group 3: Price Trends - Storage prices have accelerated in October 2025, with increases ranging from 40% to 100% across various product types, driven by heightened demand from AI servers and proactive price adjustments by manufacturers [37][39]. - Specific products like DDR5 and DDR4 have seen significant price hikes, with DDR5 prices increasing by 102.6% in October [39]. Group 4: Future Outlook - The storage industry is expected to continue its upward trajectory into 2026, with supply-demand imbalances likely to persist, supporting ongoing price increases [6][60]. - Investment opportunities are recommended in both overseas and domestic storage manufacturers, particularly those involved in niche storage chips and supply chain components [6][60].