Core Viewpoint - The company, 贝克微, reported a slight revenue increase of 0.4% to 2.92 billion RMB in 1H25, achieving a historical high despite a high base in 1H24, and demonstrated strong profitability with a net profit growth of 14.9% to 77 million RMB [1][2][3] Financial Performance - Revenue for 1H25 reached 2.92 billion RMB, a 0.4% increase from 2.91 billion RMB in 1H24, reflecting a year-on-year growth of 42% [1] - Gross margin maintained at 51.8%, up 0.5 percentage points year-on-year, while net profit increased by 14.9% to 77 million RMB, with a net profit margin of 26.4%, up 3.3 percentage points year-on-year [1][2] - The company adjusted its revenue growth forecast for 2025 from 25% to 16% due to capacity constraints, while net profit forecast was slightly adjusted to 202 million RMB, reflecting a 21% year-on-year growth [2] Product Development - The company added 130 new SKUs in 1H25, bringing the total to 850, with an annual forecast of over 200 new SKUs to support long-term revenue growth and market penetration [1][2] Strategic Adjustments - Management is strategically reducing reliance on major clients and diversifying the distribution network, which may impact short-term sales but is expected to enhance business resilience in the long term [2] - The company is experiencing a 21% year-on-year increase in inventory, indicating adjustments in customer structure that may affect short-term revenue growth [2] Market Outlook - The industrial-grade analog chip market shows signs of recovery, influenced by price adjustments from competitors and improved industrial outlooks, although revenue growth in the second half may be constrained by wafer factory capacity issues [2] - The company’s business model and self-developed EDA platform are expected to sustain high profit margins, with projected gross margins above 50% and net margins above 26% for FY25/26E [2] Investment Rating - The company maintains a "Buy" rating with a target price of 93 HKD, based on a 26.6 times forecasted P/E ratio for 2025, reflecting a favorable valuation compared to industry peers [3] - The current valuation corresponds to 17.4 times and 13.8 times forecasted P/E ratios for 2025 and 2026, significantly lower than the average of domestic and international peers [3]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 93, indicating a potential upside of 53.0% from the current price of HKD 60.80 [3][9]. Core Views - The company has demonstrated strong profitability during its strategic adjustments, with a slight revenue increase of 0.4% year-on-year in 1H25, reaching RMB 292 million, despite a high base from 1H24 [1]. - The gross margin remains robust at 51.8%, reflecting a year-on-year improvement of 0.5 percentage points, while net profit increased by 14.9% to RMB 77 million, with a net margin of 26.4% [1]. - The company is focused on the industrial-grade long-tail chip market, expanding its product matrix and maintaining a solid IP/EDA design platform, which supports its long-term growth outlook [1][9]. Financial Summary - Revenue projections for FY25E are set at RMB 672 million, with a year-on-year growth rate of 16.1%, down from previous estimates due to capacity constraints [2][10]. - The company expects to maintain a gross margin above 50% and a net margin above 26% in FY25/26E, supported by its business model and self-developed EDA platform [9][10]. - The earnings per share (EPS) is projected to reach RMB 3.20 in FY25E, with a price-to-earnings (P/E) ratio of 17.4 times [2][10]. Market Position - The company is positioned favorably within the semiconductor industry, with a market capitalization of HKD 1,094.4 million and a significant increase in stock performance over the past months [4][6]. - The average P/E ratio of comparable companies in the industry is significantly higher, indicating that the company's current valuation may be attractive [11].