Guoyuan Securities Co., Ltd. Peng Qi recently conducted research on Montage Technology and released a research report titled "Montage Technology's 2024Q3 Performance Review: Q3 Interconnect Chip Revenue Reaches New High, Capacity Chips Achieve Large-scale Shipments", this report gives Montage Technology a buy rating, and the current stock price is 64.55 yuan.

Montage Technology (688008).

Key takeaways from the report

On October 30, the company released the 2024Q1-Q3 performance announcement, with 24Q1-Q3 revenue of 2.571 billion yuan (YoY +68.56%), net profit attributable to the parent company of 978 million yuan (YoY +318.42%), gross profit margin and net profit margin of 58.12% and 37.98% respectively. In the third quarter, the company's revenue reached 906 million yuan (YoY+51.60%, QoQ-2.35%), net profit attributable to the parent company reached 385 million yuan (YoY+153.40%, QoQ+4.10%), and gross profit margin and net profit margin were 58.74% and 42.30% respectively.

Memory interface chips: The continuous improvement of DDR5 penetration rate is expected to drive the company's DDR5 memory interface chip shipments to account for more than 50%, driving the company's Q3 interconnection chip sales to 849 million yuan, an increase of 46.02% year-on-year, creating a record high in single-quarter sales revenue, driving the company's total revenue and net profit attributable to the parent company to continue to increase. At present, the company's DDR5 second-generation RCD shipments exceed the first-generation chips, and the third-generation chips will start large-scale shipments in 24H2, and DDR5 shipments are expected to exceed DDR4. The company actively invests in the research and development of the fifth generation of RCD chips, and strives to maintain the leading edge of product technology.

AI "Capacity" Chips: With the promotion of AI industry trends, the company's "Capacity" chips have begun to be shipped on a large scale, contributing new performance growth points to the company and bringing greater performance flexibility. PCIe retimer: The company shipped 150,000 units and 300,000 units in 24Q1 and 24Q2 respectively, and more than 600,000 units shipped in Q3, doubling its growth. In addition, the company actively promotes the engineering research and development of PCIe6.0retimer chips, and has made significant progress in the development and verification of key IP in Q2, which is expected to be introduced to the market in 25-26. MCD/MDB: The company has begun to be used by mainstream foreign cloud computing vendors, with a revenue of more than 70 million in the first half of the year, and is expected to switch from trial to commercial use in 25 years. CKD: The company took the lead in trial production in April 24, and began small-scale shipments in 24Q2, and with the release of PC processors that support CKD chips, it is expected to start gradually increasing in 24Q4. MXC: The company is expected to ship in '25, and memory pooling is expected to be gradually implemented in '26-27.

We forecast that the company's revenue in 24-25 years will be 37.03/5.598 billion yuan, the net profit attributable to the parent company will be 1.325/2.022 billion yuan, the EPS will be 1.16/1.77 yuan/share, and the corresponding PE will be 59/39 times respectively, maintaining the "buy" rating.

Financial data and valuations

　　2023A2024E2025E

Note: The market expectation is the Wind consensus and the stock price is the closing price on October 31, 2024

Risk Warning

Upside risks: Competitors' capacity expansion is lower than expected; DDR5 penetration is faster than market expectations; CXLDram shipment acceleration; The penetration rate of AI PCs is accelerating

Downside risks: DDR5 penetration is lower than expected; Intensified competition in the industry accelerates price decline; Along with the supply of chips such as PMICs, etc

According to the calculation of the research report data released in the past three years, the research team of Chen Yaobo of Huaan Securities has conducted in-depth research on the stock, with an average forecast accuracy of 79.66% in the past three years, and its forecast attributable net profit in 2024 is 1.513 billion yuan, and the predicted PE is 48.53 based on the current price.

The breakdown of the latest earnings estimates is as follows:

A total of 17 institutions have rated the stock in the last 90 days, with 10 having a buy rating and 7 having an overweight rating. The average institutional price target over the last 90 days is 70.53.

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