Event: The company released the third quarter report of 2024, and the company achieved revenue of 5.025 billion yuan in the first three quarters of 2024, a year-on-year increase of 136.76%; the net profit attributable to the parent company was 228 million yuan, a year-on-year increase of 147.13%; The net profit was 225 million yuan, a year-on-year increase of 146.07%. In a single quarter, Q3 2024 will achieve revenue of 1.584 billion yuan, a year-on-year increase of 62.64% and a quarter-on-quarter increase of 17.59%; The net profit attributable to the parent company was -55 million yuan, a year-on-year decrease in loss, and the non-net profit was -60 million yuan, a year-on-year loss decrease, and a month-on-month loss.

Rapid year-on-year growth in performance in the first three quarters, and substantial improvement in profitability: In the first three quarters of 2024, the company's performance achieved rapid year-on-year growth, mainly due to: 1. The company vigorously expanded first-line customers at home and abroad, achieved a breakthrough in market and business growth, and product sales increased significantly year-on-year; 2. The storage industry recovered, and the company's product prices rebounded year-on-year. In the first three quarters of 2024, the company's gross profit margin was 22.51%, a year-on-year increase of 25.99pcts, mainly due to the year-on-year recovery of the company's product prices, and the gross profit margin improved significantly year-on-year, the company's net profit margin was 4.17%, a year-on-year increase of 26.97pcts, and the company's profitability improved significantly. In terms of expenses, the company's sales, management, R&D and financial expense ratios in the first three quarters of 2024 were 3.57%/4.63%/6.74%/2.14%, respectively, with year-on-year changes of -1.48/+0.68/-0.40/-0.50pcts, respectively.

Continue to deepen the field of storage and deploy advanced packaging technology: The company's products have a leading market share among domestic storage manufacturers, and have entered the supply system of first-line customers at home and abroad in various segments, and its revenue has maintained rapid growth. In the field of mobile phones, the company's embedded storage products have entered well-known customers such as OPPO, Transsion Holdings, Motorola, HMD, ZTE, TCL, etc.; In the PC field, the company's SSD products have entered Lenovo, Acer, HP, Tongfang and other well-known PC manufacturers at home and abroad; In the field of domestic PC, the company is the main supplier of SSD products, occupying a dominant share; In the field of smart wearables, the company's products have entered Google, Xiaomi, Meta, Xiaotiancai and other internationally renowned smart wearable manufacturers; In the enterprise-level field, the company has established a Beijing subsidiary to focus on the R&D and sales of enterprise-level storage, providing industry customers with complete and leading enterprise-level PCIe/SATA SSD, RDIMM, CXL DRAM storage solutions; In the field of automotive specifications, the company's products have been mass-produced by domestic leading car companies and Tier1 customers. On the one hand, the company has accumulated many years of technical foundation in the fields of memory chips and logic integration packaging, testing and research and development, and has established a mature supply chain system. On the other hand, the market demand for 2.5D/3D advanced packaging services is urgent, and Guangdong Xincheng Hanqi has carried out the development of related technologies, including: multi-layer high-density linewidth RDL technology, small-pitch uBump, TSV open silicon-based wafer-level interlayer processing technology, 3D stacking and other advanced packaging technologies. At present, the project is still in the early stage of investment, is under construction, and is expected to be put into production in 2025, officially providing customers with a complete set of advanced packaging and testing solutions. After the completion of the project, it can improve the scale and technical level of the integrated circuit industry in the Greater Bay Area, and play a role in supplementing and strengthening the development of the integrated circuit industry in the Greater Bay Area. The

memory chip industry has a bright future, and advanced test technology consolidates its leading position: According to WSTS, the storage market will usher in strong growth in 2024, and the storage market size is expected to reach $163.2 billion, a year-on-year increase of more than 70%. According to a report released by Yole, a world-renowned market research organization, the storage market space is expected to grow to $263 billion in 2027, thanks to the continuous growth of industries such as data centers, cloud computing and 5G, as well as the gradual recovery of the global semiconductor supply chain. The large-scale development and application of a new generation of information technology such as 5G, Internet of Things, and data centers in China has also given rise to a strong demand for semiconductor memory in China. Relying on the broad demand of the Chinese market, the local storage wafer manufacturers represented by YMTC and Changxin Storage have gradually increased their market share. The company realizes a high degree of automation and full traceability of the manufacturing process through the integrated intelligent online operation of chip packaging equipment, module manufacturing equipment and test equipment systems. Through the online transformation of equipment and the introduction of AGV robots, the chip packaging and testing production module can reach 99% of the automated production level, and the module manufacturing and testing module can reach 91% of the automated production level. The company has mastered advanced packaging processes such as 16-layer stacked die, 30~40μm ultra-thin die, and multi-chip heterogeneous integration, and provides support for the large-scale mass production of NAND Flash chips, DRAM chips and SiP packaging chips. The company has full-stack R&D capabilities from test equipment, test algorithms to test software in ATE testing, Burn-in testing, SLT testing and other aspects of NAND Flash and DRAM chips, and is at the leading level in China. Through years of product development, testing, and application cycle iteration, the company's testing capabilities have been continuously accumulated and improved, and the comprehensive failure rate of products is low, and it has strong competitiveness.

Upgraded to Buy "Overweight" rating: The company follows the upgrade direction of memory large capacity, large bandwidth, low latency, low power consumption, high security, small size, etc., and continues to innovate in six application fields, including mobile intelligent terminals, PCs, industry terminals, data centers, smart cars, and mobile storage, and has created a full range of differentiated product systems and services. PC storage, truck-gauge storage, enterprise-class storage, mobile storage, etc. With the recovery of the storage industry, the company vigorously expands domestic and foreign first-line customers, the company has achieved a breakthrough in market and business growth, and product sales have increased significantly year-on-year, so it is expected that the company's net profit attributable to the parent company in 2024-2026 will be 341 million yuan, 612 million yuan, and 780 million yuan respectively, and the EPS will be 0.79 yuan, 1.42 yuan, and 1.81 yuan respectively, and the corresponding PE will be 76X, 42X, and 33X.

Risk warning: exchange rate fluctuation risk, downstream demand recovery is less than expected, technological innovation risk, market competition risk.