Securities Star News, on October 31, 2024, Loongson Zhongke (688047) announced that the company accepted institutional research on October 29, 2024, Hel Ved Capital Management Limited, Talent Capital, Pearl River Life Insurance Co., Ltd., Caitong Securities, Chang'an Fund Management Co., Ltd., Changsheng Fund Management Co., Ltd., Chuangjin Hexin Fund, Tamsui Spring (Beijing) Investment Management Co., Ltd., Debang Securities, Dongxing Securities, Fengyan Investment Management (Shanghai) Co., Ltd., Fengjing Capital Management (Beijing) Co., Ltd., IGWT Investment, Fuzhou Development Zone Sanxin Asset Management Co., Ltd., Futong Private Equity Investment Fund, Gongqingcheng Ding Rui Asset Management Co., Ltd., Minsheng Securities Co., Ltd., Mingshi Partner Fund, Nantong Xining Investment Management Co., Ltd., Nord Fund Management Co., Ltd., Ping An Bank Co., Ltd., Ping An Asset Management Co., Ltd., Shanxi Securities Co., Ltd., King Tower Asset Management, Shanghai Model Investment Management Co., Ltd., Shanghai Bodu Investment Management Co., Ltd., Shanghai Chenyan Asset Management Center (Limited Partnership), Shanghai Dushi Investment Co., Ltd., Shanghai Fosun High-tech (Group) Co., Ltd., Shanghai Guqu Private Equity Fund Management Co., Ltd., Shanghai Guozan Private Equity Fund Management Partnership (Limited Partnership), Shanghai Hanggui Investment Management Co., Ltd., Shanghai Chaos Investment (Group) Co., Ltd., Shanghai Lingze Investment Management Co., Ltd., SMAM Sumitomo Mitsui Investment Management (Hong Kong) Co., Ltd., Shanghai Liuren Asset Management Co., Ltd., Shanghai Miniu Investment Management Co., Ltd., Shanghai Mingyu Asset Management Co., Ltd., Shanghai Nantu Asset Management Co., Ltd., Shanghai Qitai Private Equity Fund Management Co., Ltd., Everbright Prudential Fund Management Co., Ltd., Guangdong Dehui Investment Management Co., Ltd., Guangdong Juzhou Investment Co., Ltd., Guangdong Xie Nuo Chenyang Private Securities Investment Management Co., Ltd., GF Securities, UBS, Guangyu Group Co., Ltd., Guangzhou Hongqi Private Equity Securities Investment Fund Management Co., Ltd., Guohua Life Insurance, Guojin Securities Co., Ltd., Guosen Securities Co., Ltd., Guoyuan Securities, Hangzhou Bank Wealth Management Co., Ltd., Manulife Asset Management Co., Ltd., Hongde Fund Management Co., Ltd., Hongyun Private Equity Fund Management (Hainan) Co., Ltd., WT Asset Management Limited, Hunan Yuancheng Private Equity Fund Management Co., Ltd., Huafu Securities, Huatai Securities, Huatai Securities Asset Management Co., Ltd., China Asset Management Co., Ltd., Huili Asset Management, HSBC Jinxin Fund Management Co., Ltd., Harvest Fund Management Co., Ltd., Bank of Communications Schroder Fund, Jiutai Fund Management Co., Ltd., Beijing Hesse Investment Management Co., Ltd., Lanxin Asia Investment (Hong Kong), Neuberger Berman Fund Management (China) Co., Ltd., Minsheng Bank Wealth Management Subsidiaries, Shanghai Xihong Private Equity Fund Management Co., Ltd., Shanghai Yingyi Asset Management Co., Ltd., Shenzhen Red Square Asset Management Co., Ltd., Shenzhen Kunpeng Henglong Investment Co., Ltd., Shenzhen Xiezhong Investment Management Co., Ltd., Suzhou Heji Investment Co., Ltd., Taiping Fund Management Co., Ltd., Beijing Hongdao Investment Management Co., Ltd., Tiancheng Fund, Tibet Zhongrui Heyin Investment Management Co., Ltd., Southwest Securities, Southwest Securities, Southwest Securities, Xiangcai Securities Research Institute, Xiaofeng Investment, New Era Securities Co., Ltd., Industrial Fund Management Co., Ltd., Industrial Securities, Industrial Securities Global Fund Management Co., Ltd., Beijing Honghui Investment Management Co., Ltd., Yuanhao Investment, Zhangzhou Venture Capital, China Merchants Fund Management Co., Ltd., China Merchants Securities Co., Ltd., Zhongtai Securities, China Securities Construction Investment Fund Management Co., Ltd., CLSA, CITIC Securities Co., Ltd., Bank of China International Securities Co., Ltd., and Zhongyuan Securities Co., Ltd. participated.

The details are as follows:

Q: The company's 6000 series chips, I think it is the company's follow-up main chips, please which downstream industries will have a relatively high demand for our 6000 series chips?

Answer: Loongson 6000 series has 3 products, one is the 4-core 3000 for the PC field, and this chip has been sold in small batches. One is the 3C6000 for the server field, this chip has 16-core, 32-core, and 64-core versions, and is currently in the sample stage. There is also an 8-core 3B6000M (that is, the version of 2K3000 in the notebook field) for the notebook field, which is currently in the tape-out stage.

In the policy market, Loongson 3000 is currently performing well, from the feedback of the whole machine enterprises, with 3000 to make the whole machine the cheapest, and the performance is also good, it should be said that the cost performance is high enough, with the gradual recovery of the party and government policy market, we are more optimistic about the market performance of 3000. Loongson 3C6000 is expected to be completed in Q2 2025 to achieve mass production and official release, we believe that among all the same type of server CPUs on the market, the cost performance of 3C6000 server CPU chips is super strong. There is enough market space for storage servers and there are no ecological barriers. We believe that in the storage server market, the 3C6000 can be open to the market. The 3B6000M notebook chip is currently in the tape-out stage, and the cost performance of this chip is also very high.

In the past, Loongson did little industry application. At present, it is no problem for the Linux software ecosystem to be office-oriented, but for complex business systems, Windows is still needed in general. Loongson 3000 can now run Windows 7 system smoothly, coupled with Loongson's binary translation, coupled with the high cost performance of Loongson products, I think industry applications will become an important direction for Loongson next year.

In terms of open markets, there will be a focus on specialized solutions for specific areas, such as storage servers; Or some hardware and software integrated vertical solutions, such as all-in-one machines.

In general, it is still the idea of "two points and one side", and the "one side" is to continue to improve the basic software and hardware platform driven by the policy market, and greatly improve the cost performance and software ecology of Loongson general CPU; The "two points" are to develop special solutions such as storage servers and cloud terminals/industry terminals with open market competitiveness based on general-purpose CPUs, and to develop embedded/special chips with open market competitiveness based on specific application requirements.

Q: What is the current model of Loongson's IP licensing business? Will this part of the business account for a certain percentage of our revenue in the future?

Answer: Loongson IP authorization currently considers two modes. The first model is a pure IP authorization model, and this business is mainly carried out for the needs of the ecosystem. At present, there are already two companies that have launched dragon architecture chips on sale, three universities have launched chips, and there are other authorized customers. The second model, similar to chip design services, provides customers with chip design services, as well as tape-out and even packaging services. The advantage of Loongson is that the IP is particularly complete.

The

revenue of IP licensing business is included in the revenue of industrial control or information chips by field, and the current volume is still relatively small, and the large-scale development of the business still needs some time. The ideal state is that in the future, there will be more than a dozen to dozens of enterprises to launch dragon architecture chips respectively, and the ecology will gradually develop.

Q: From the recent situation, has there been any change in the downstream market demand or order demand?

A: Both e-government and security applications have recovered recently. In terms of revenue, in the short term, revenue still needs to be driven by the restart of the existing two main business engines. In the long run, it is necessary to continue to expand in the server market, industry market, and open market. At the moment, we are seeing some signs that some demand in the policy market has recovered. Of course, it will take some time, and the degree of demand recovery in different sub-sectors is different, some are faster, some are slower.

Q: Loongson's information chip business has increased compared with the same period last year, I want to know which aspect of the reason is relatively large? For example, is it because the overall policy market recovery is relatively large, or is it due to the sharp increase in the cost performance of 3A6000 products, or the market share of Loongson has risen? And the current situation and future outlook of Loongson's market share?

Answer: One thing is certain, if there is no significant improvement in the cost performance of 3000, even if the market has a certain recovery, the recovery of Loongson's information chip business will definitely be discounted. With the launch of the 3000, we have clearly felt that our customers are more motivated to buy, such as being more active in sales than before. So I think this is the relationship between internal and external factors, of course, if there is no market recovery in external factors, there may not be a great improvement, and the internal reason is that the cost performance of Loongson chips has increased significantly. The rapid year-on-year increase in the information chip business is due to the superposition of internal and external factors.

In the last round of procurement cycle, Loongson accounted for about 30% of the e-government office field. We hope that in the process of sinking the market, Loongson's market share will continue to increase. Because the cost performance of Loongson's new products has been greatly improved; At the same time, the structure of the industry is also being readjusted, for example, in the past, the whole machine enterprises were very concentrated, and now there are dozens of complete machine enterprises. Loongson is very open, and supports both traditional and emerging machine enterprises, and we also support software companies that want to do it vertically. We hope that our market share in the e-government office sector will continue to increase.

In the longer term, Loongson should continue to strive to improve the high cost performance of chip products, build a more benign ecological environment, get rid of excessive dependence on the policy market, and gradually move towards an open market.

Q: Server business area, company products and shipping forms? And how is the current business going?

Answer: At present, the server chip products on sale are mainly 16-core 3C5000 and 32-core 3D5000, which are shipped in the form of chips, boards, and solutions, and are oriented to customers in security, energy and other industries. The server based on Loongson CPU was shortlisted for the server procurement standard package of China Mobile and other operators, and the Loongson server solution began to occupy a place in the industry application.

With the continuous introduction of a series of server products with greatly improved cost performance, and the deepening of industry customers' understanding of autonomy, Loongson products can gradually participate in open market competition in the server field.

Q: The core contradiction between the company and the follow-up may shift from the R&D side to the sales side, because we may have served more of the policy market before, so what kind of adjustments will the company make in the follow-up marketing?

Answer: On the one hand, with the policy market from the party and government to the industry, from the PC to the server, the corresponding sales personnel and organizations should be strengthened. On the other hand, in the open market, some relatively fixed or single application scenarios can be used as vertical solutions, without the problem of software ecology, and only look at the cost performance of the product. For example, the storage server has enough market space and no ecological barriers, as long as we make the product cost-effective, we must have market competitiveness, and this part of the business is the direction we will focus on in the future.

There is also the reconstruction of the industrial chain and organizational ecology, including channel mechanism, incentive mechanism, customer classification management, price strategy and so on. The continuous optimization of the sales side is a series of measures. In recent years, we have emphasized stabilizing staff and increasing efficiency, but we are also gradually enhancing the strength of the sales side and increasing sales investment, which is certain.

Q: Regarding the company's X86 system-level binary translation work, I understand that it is more similar to a virtual machine after it is really done, for example, all software can be run on a virtual machine, but the operation efficiency will be a little lower, is this probably the concept?

A: There are two types of binary translation: user-level and system-level. In the past, Loongson insisted on doing user-level binary translation work, not running Windows, but directly running Windows applications. This year, I started to try system-level translation, and I can run Windows directly, and now I can run Windows 7 system smoothly, and it is much easier to run the application software through system-level translation. Windows 10 itself needs to render, and will use the GPU, and our next optimization is to turn on the GPU. I don't think it's too difficult to run Windows smoothly technically, and there are still some engineering problems to solve.

We plan to achieve the "triple integration" of windows, file systems, and devices in Linux and Windows systems. Windows windows can be launched on the Linux platform, and both Windows windows and Linux windows exist in Linux systems, which is window fusion. Windows window files can be copied directly to Linux windows, which is file system fusion. There is also the convergence of IO devices, the biggest problem of Linux is that the device driver is incomplete, the printer driver is incomplete, the scanning driver is not there, and there are many games that do not. This problem will also be solved after the device fusion is completed. In this way, the system-level solution is relatively simple, and there will definitely be some loss of performance, and we are constantly optimizing to gradually improve the efficiency of system-level translation.

Loongson Zhongke (688047) main business: the development, sales and service of processors and supporting chips.

Loongson Zhongke's third quarter report in 2024 shows that the company's main revenue was 308 million yuan, a year-on-year decrease of 21.94%; net profit attributable to the parent company -343 million yuan, a year-on-year decrease of 65.67%; deducted non-net profit of -371 million yuan, a year-on-year decrease of 22.39%; In the third quarter of 2024, the company's single-quarter main revenue was 88.1937 million yuan, a year-on-year increase of 2.05%; The net profit attributable to the parent company in a single quarter was -105 million yuan, a year-on-year decrease of 1.47%; Non-net profit deducted in a single quarter was -110 million yuan, an increase of 13.63% year-on-year; The debt ratio was 13.84%, the investment income was 16.2308 million yuan, the financial expenses were -5.3527 million yuan, and the gross profit margin was 29.97%.

A total of 3 institutions have rated the stock in the last 90 days, and 3 have overweight ratings.

Here's the detailed earnings forecast information:

Margin data shows that the stock has a net financing inflow of 205 million in the past three months, with an increase in the financing balance, and a net outflow of 22.3265 million in securities borrowing and lending, with a decrease in the balance of securities borrowing and lending.

The above content is compiled by Securities Star based on public information, generated by intelligent algorithms, and does not constitute investment advice.