This report guide:

The company's Q3 performance was lower than expected, and the net profit growth rate was mainly affected by depreciation and partial exchange, and the equity incentive was issued, taking the revenue of the product line of 13 million pixels and above as the standard, demonstrating the company's confidence in the development of high-end CIS.

Investment Highlights:

Maintain an "Overweight" rating with a price target of $25.48. The company's mobile phone CIS shipments are the world's first, the product from the traditional 2M-8M pixel gradually to more than 30M iteration, with the industry's leading process research and development and circuit design strength, due to the first three quarters of revenue less than expected and depreciation accelerated, so the company's 24-25 year EPS forecast was lowered 0.05/0.17 yuan (the original value of 24-25 years was 0.15/0.27 yuan), and the new 26-year EPS was 0.28 yuan. Considering that the semiconductor industry has an average valuation of 48 times PE in 25 years, and the company is one of the scarce Fablite models, the assets are heavier, and a certain valuation premium is given, giving it 150 times PE in 2025 and maintaining a target price of 25.48 yuan.

The company's Q3 performance was lower than expected, and the net profit growth rate was mainly affected by depreciation and some foreign exchange, and it is expected to gradually recover from the increase in the share of 50M CIS chips in the future. The company's operating income in 24Q3 was 1.764 billion yuan, +36% year-on-year and +16% month-on-month, mainly benefiting from the strong growth of high-pixel CIS in the mobile phone and non-mobile phone markets, as well as the significant improvement of TDDI products; The net profit attributable to the parent company was -69 million yuan, and the net profit not attributable to the parent company was -89 million yuan, mainly due to the exchange loss of 90 million yuan caused by the decline in the US dollar exchange rate.

The company issued an equity incentive, taking the revenue of the product line of 13 million pixels and above as the standard, demonstrating the company's confidence in the development of high-end CIS. The number of shares granted by the company is 10 million, the grant price is 8.62 yuan per share, and the number of incentives is 152. The company's performance appraisal target requires that the revenue of product lines of 13M and above in 25-28 years shall not be less than 15, 20, 24 and 2.8 billion yuan respectively.

Catalyst: Q4 industry demand is large; 50M product line penetration accelerates.

Risk warning: the downstream recovery is less than expected; The competitive landscape of the industry has deteriorated.