Group 1 - ODM leader Huaqin Technology's strategic investment in Jinghe Integrated is attracting industry and market attention despite unexpected reactions in the secondary market [1] - On the first trading day after the announcement, both companies experienced a decline, with Huaqin Technology closing down 1.20% and Jinghe Integrated down 0.27% [1] - Industry experts express skepticism regarding the collaboration's logic, questioning the specific business synergies and the necessity of such a significant equity acquisition [1][2] Group 2 - Huaqin Technology is a core supplier for several well-known cloud service providers in China, with its server ODM business showing strong growth and capabilities [2] - The company's high-performance computing products generated revenue of 63.2 billion yuan in 2024, reflecting a year-on-year growth of 28.79% [2] - Jinghe Integrated is expected to make significant progress in its 28nm logic chip technology this year, with risk production anticipated by the end of the year [3] Group 3 - The 28nm logic platform from Jinghe Integrated supports various application chips, enhancing performance and reducing power consumption [3] - Huaqin Technology's position as a global leader in ODM for smart devices and high-performance computing is expected to create substantial demand for Jinghe Integrated's chip products, indicating potential upstream and downstream synergies [3]

Core Viewpoint - The global semiconductor market is recovering, leading to a significant improvement in the profitability of Jinghe Integrated [2][5] Financial Performance - Jinghe Integrated expects to achieve operating revenue of 5.07 billion to 5.32 billion yuan in the first half of 2025, representing a year-on-year growth of 15.29% to 20.97% [2] - The company anticipates a net profit of 260 million to 390 million yuan, with a year-on-year increase of 39.04% to 108.55% [2][5] - In 2024, Jinghe Integrated reported operating revenue of 9.249 billion yuan, a year-on-year increase of 27.69%, and a net profit of 533 million yuan, up 151.78% [5] Market and Capacity Utilization - The increase in performance is attributed to the recovery of industry conditions, increased product sales, and high capacity utilization rates [3][5] - Jinghe Integrated's production line load reached 110% in June 2024, with order volumes exceeding current capacity [5] Research and Development - The company has placed a strong emphasis on R&D, with R&D expenses increasing from 397 million yuan in 2021 to 1.284 billion yuan in 2024, totaling 3.596 billion yuan over four years [6] - Jinghe Integrated has obtained 218 new patent authorizations since the beginning of 2025, a 17.84% increase compared to the same period last year [3][6] - The company focuses on technological breakthroughs and product diversification, with ongoing developments in various chip technologies [5][6] Strategic Focus - Future R&D plans will concentrate on core products such as DDIC and CIS, while also addressing emerging markets like automotive chips and AR/VR applications [6] - The company aims to strengthen collaborations with strategic clients and expand into high-end product development [6]

Macro Dynamics - The State Administration for Market Regulation has released the first national standard for campus meal service management, aimed at enhancing food safety regulations in schools, covering aspects from recipe management to emergency handling [1] - The People's Bank of China and other regulatory bodies have issued implementation details for cross-border asset management pilot projects in Hainan Free Trade Port, facilitating foreign investment in local financial products [2] - In June, China's total electricity consumption reached 867 billion kWh, a year-on-year increase of 5.4%, with significant growth in residential electricity usage [3] - China's express delivery volume has maintained its position as the world's largest for 11 consecutive years, with over 500 million packages collected daily [4] - The National Space Administration has implemented a lifelong accountability system for quality responsibilities in commercial space projects to enhance oversight [5] Financial Institutions - The National Association of Financial Market Institutional Investors has initiated a self-regulatory investigation into Guangfa Bank for potential price manipulation in its bond issuance process [6] Market Data - On July 21, A-shares saw collective gains, with the Shanghai Composite Index rising by 0.72% and the Shenzhen Component Index by 0.86%, with a total market turnover of approximately 1.699 trillion yuan [8] - The Hong Kong stock market closed with the Hang Seng Index up by 0.68%, led by gains in construction and cement stocks [9] Company Dynamics - Good Products has reported a court case involving a share transfer dispute with a claim amount of 996 million yuan, which may affect the control transfer of its major shareholder [10] - JD.com has announced its entry into the field of embodied intelligence, focusing on technological innovation and applications in supply chain scenarios [11] - Jinghe Integrated is expecting a net profit increase of 39% to 109% year-on-year for the first half of 2025, driven by industry recovery and increased product sales [12]

Group 1 - The company expects to achieve operating revenue between 5,070 million and 5,320 million yuan for the first half of 2025, representing a year-on-year increase of 67.22 million to 92.22 million yuan, or a growth rate of 15.29% to 20.97% [1][2] - The net profit attributable to the parent company is projected to be between 260 million yuan and 108.55% [1] - The net profit attributable to the parent company after deducting non-recurring gains and losses is expected to be between 157 million and 235 million yuan, reflecting an increase of 62.33 million to 140.33 million yuan, or a growth rate of 65.83% to 148.22% compared to the same period last year [1][2] Group 2 - The company attributes the performance increase to high utilization rates, which have positively impacted operating revenue and product gross margins [2] - The company continues to strengthen its position in the market, with CIS becoming the second major product line, while other products also show improved competitiveness [2] - The company has achieved mass production of 40nm high-voltage OLED display driver chips and 55nm full-process stacked CIS chips, with ongoing development of 28nm OLED display driver chips and 28nm logic chips expected to enter risk mass production by the end of the year [2]

Investment Rating - The report maintains a "Buy" rating for the company [7] Core Views - The company achieved a revenue of 2.568 billion RMB in Q1 2025, representing a year-on-year growth of 15.25%, and a net profit attributable to the parent company of 135 million RMB, up 70.92% year-on-year [1][2] - The increase in net profit is primarily driven by revenue growth and high capacity utilization, along with a decrease in unit sales costs, leading to improved gross margins [1] - The semiconductor market is expected to continue its recovery, with the company benefiting from stable demand in LCD/TDDI and rapid revenue contributions from new platforms [2][3] Summary by Sections Q1 2025 Review - The global semiconductor market is recovering, with a projected sales increase of 20.3% year-on-year to 632.3 billion USD in 2024, positively impacting the company's revenue growth [2] - The company has successfully ramped up production of new platforms, including 55nm mid-to-high-end single-chip and stacked CIS chip processes, and has achieved mass production of 40nm high-voltage OLED chips [2] 2025 Outlook - The company is well-positioned to capitalize on growth opportunities in OLED, CIS, and automotive markets, with OLED demand expected to reach 860 million units in 2025, and a projected CAGR of 5.1% for the global CIS market from 2022 to 2028 [3] - The company is actively enhancing its OLED and CIS platform applications and has completed multiple automotive process certifications [3] Financial Projections and Valuation - The target price is set at 27.10 RMB, with projected net profits for 2025, 2026, and 2027 at 870 million, 1.12 billion, and 1.31 billion RMB respectively, corresponding to EPS of 0.44, 0.56, and 0.65 RMB [4] - The report assigns a PB of 2.50x for 2025, reflecting a discount to the industry average of 3.0x due to pricing pressures and high depreciation during the capacity expansion phase [4]