Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company focuses on deepening design and process collaboration, enhancing its EDA+IP ecosystem through acquisitions [1] - The company has shown stable revenue growth with a CAGR of 32.13% from 2020 to 2024, and its R&D expenses are significant, with rates of 71.1% and 64.8% for 2023 and 2024 respectively [7][31] - The company is positioned as a leading domestic EDA enterprise, with successful acquisitions enhancing its product offerings and technical capabilities [10] Summary by Sections Company Overview - The company's main products include manufacturing EDA, design EDA, device testing systems, and one-stop technology development [17] - The company has completed three acquisitions from 2010 to 2023, indicating a strategy of innovation and acquisition [7][22] - As of Q3 2025, the top six shareholders hold 59.7% of the shares, indicating a concentrated ownership structure [23] Market Data - As of December 15, 2025, the company's current price is 33.79 yuan, with a total market capitalization of approximately 14.70 billion yuan [4] - The company has shown a 12.71% year-on-year revenue growth for the first three quarters of 2025 [30] Financial Performance - The company's revenue for the first three quarters of 2025 reached 3.15 billion yuan, with a net profit of 42 million yuan, reflecting a significant year-on-year increase of 173.46% [30] - The company’s gross margin remains high at 89.1%, with effective control over expenses [31] EDA Market Insights - The global EDA market is expected to grow steadily, with a projected size of approximately 14.55 billion USD in 2025, increasing to 32.15 billion USD by 2034, representing a CAGR of 9.21% [51] - The EDA industry is highly concentrated, with the top three companies holding 74% of the market share [58] Strategic Acquisitions - The company plans to acquire Ruicheng Chip Micro and Naneng Micro in 2025, aiming to become the first listed company in China to achieve deep collaboration between EDA and semiconductor IP [9][10] - The acquisitions are expected to expand the company's revenue scale and profitability [9]

Core Viewpoint - The company reported a significant improvement in financial performance for the first three quarters of 2025, with revenue growth and a return to profitability compared to the previous year [1][2]. Financial Performance - For the first three quarters of 2025, the company achieved revenue of 315 million yuan, a year-on-year increase of 12.71%, and a net profit attributable to shareholders of 41.99 million yuan, recovering from a loss of 57.16 million yuan in the same period last year [1]. - In Q3 2025, the company generated revenue of 96.17 million yuan, up 15.73% year-on-year, with a net profit attributable to shareholders of -4.19 million yuan, also an improvement from a loss of 16.28 million yuan in the previous year [1]. Business Segments - The EDA software licensing business generated revenue of 21.2 million yuan in the first three quarters of 2025, reflecting a year-on-year growth of 10.71%, primarily driven by the scale introduction of products like NanoSpice and NanoDesigner [2]. - The semiconductor device characteristic testing system business saw revenue of 40.39 million yuan, with a remarkable year-on-year increase of 40.29% in Q3, as the 981X series low-frequency noise testing system gained widespread recognition [2]. - The technology development solutions business reported revenue of 61.64 million yuan, showing a substantial year-on-year growth of 89.58% [2]. - Domestic revenue for the first three quarters was 23 million yuan, up 20.20% year-on-year, while overseas revenue reached 83.72 million yuan [2]. Research and Development - The company invested 210 million yuan in R&D during the first three quarters of 2025, with an R&D expenditure-to-revenue ratio of 66.79%, indicating a year-on-year decrease of 4.41 percentage points, suggesting the emergence of scale effects in R&D [2]. Strategic Initiatives - The company plans to issue shares and pay cash to acquire 100% of Chengdu Ruicheng Chip Micro and 45.64% of Nengneng Microelectronics, aiming to enhance its EDA and IP business synergy and position itself as a rare platform company in China [2]. Investment Outlook - The company is recognized as a rare EDA firm with global competitiveness, benefiting from the growth of the domestic semiconductor industry and opportunities for self-sufficiency. It is gradually expanding from manufacturing EDA to a full-process design EDA through internal R&D, external acquisitions, and ecosystem development [3]. - Revenue projections for 2025-2027 are 534 million yuan, 676 million yuan, and 836 million yuan, with net profits attributable to shareholders of 4 million yuan, 21 million yuan, and 50 million yuan respectively. The investment rating is maintained at Buy-A, with a target price of 43.62 yuan, equivalent to 28 times the dynamic price-to-sales ratio for 2026 [3].

Core Viewpoint - The acquisition of Ruicheng Chip Micro by Gaon Electronics signifies a strategic shift in China's EDA industry from "tool-based" to "platform-based" integration, reflecting the evolving landscape of the semiconductor sector in response to domestic and international pressures for self-sufficiency and innovation [1][5][10]. Group 1: Acquisition Details - Gaon Electronics plans to acquire 100% of Ruicheng Chip Micro and 45.64% of Naneng Micro through a combination of share issuance and cash payment, making both companies wholly-owned subsidiaries [1]. - The acquisition is seen as a critical step in addressing the structural gap in the domestic EDA ecosystem, particularly in the IP authorization segment, which has been a weakness for Chinese EDA players [3][5]. Group 2: Market Context - The global semiconductor IP market reached $7.04 billion in 2023 and is projected to grow to $15.68 billion by 2032, with a compound annual growth rate of 9.31% from 2024 to 2032 [4]. - The EDA industry is characterized by high market concentration, with major players like Synopsys, Cadence, and Siemens EDA controlling over 90% of the market [8]. Group 3: Financial Implications - Ruicheng Chip Micro is expected to generate approximately 357 million yuan in revenue in 2024, with over 166 million yuan coming from its core IP authorization business, and a net profit exceeding 34 million yuan [5]. - Gaon Electronics reported a revenue of 420 million yuan for 2024 but faced a net loss of 95 million yuan, primarily due to high R&D investments and a small revenue base [5]. Group 4: Strategic Evolution - Gaon Electronics is adopting a unique EDA evolution path characterized by a Design-Technology Co-Optimization (DTCO) framework, which integrates EDA tool design with wafer manufacturing processes [7][8]. - The acquisition of Ruicheng Chip Micro allows Gaon to establish a complete closed-loop system encompassing process, design, manufacturing, and verification, marking a significant milestone in the Chinese EDA landscape [8][10]. Group 5: Industry Collaboration - The acquisition reflects a broader trend of consolidation within the Chinese EDA industry, where companies are increasingly collaborating to build a cohesive ecosystem, akin to the historical development seen in the global EDA market [8][10]. - The transaction is viewed as a "win-win" for all stakeholders involved, enhancing Gaon's core capabilities, providing an exit strategy for Ruicheng, and serving as a model for future industry integration efforts [10]. Group 6: Future Outlook - The next decade for China's EDA industry is expected to focus on building a complete ecosystem that integrates EDA tools, IP authorization, and system delivery, moving from a phase of tool development to a more comprehensive platform approach [12]. - The strategic value of the acquisition extends beyond financial metrics, positioning Gaon Electronics as a foundational infrastructure provider for the semiconductor design industry in China [10][12].