Event: The company released the 2024 performance report, with revenue of 6.704 billion yuan in 2024, a year-on-year increase of 86.71%, a net profit attributable to the parent company of 176 million yuan, a year-on-year turnaround, and a non-net profit attributable to the parent of 74 million yuan, a year-on-year turnaround.

The storage industry recovered, and product sales increased significantly year-on-year. The company has full-stack capabilities from product planning, design and development to advanced manufacturing, and its product line covers various types of memory such as NAND and DRAM. Through its global marketing network and localization team, the company has obtained global operation authorizations for international brands such as HP, Hongqi and Predator, as well as Lenovo's authorization in overseas markets. The company's products have a leading market share in China, and have entered the supply system of first-line customers at home and abroad. In the field of mobile phones, embedded storage products have entered customers such as OPPO, Transsion, and Motorola; In the PC field, SSD products have entered Lenovo, Hongqi, HP and other manufacturers, and occupy a dominant share in the domestic PC field. In 2024, the company will firmly grasp the upward opportunities in the industry, vigorously expand first-line mobile phone and PC customers at home and abroad, achieve a breakthrough in market and business growth, and significantly increase product sales year-on-year.

Deploying AI mobile phones and AIPC products, the wearable storage business continues to grow. The company has launched embedded storage products such as UFS3.1, LPDDR5/5X, and uMCP for AI mobile phones, and has deployed 12GB and 16GB large-capacity LPDDRs. Launched high-performance storage products such as DDR5 and PCle 4.0 for AIPC. In the field of smart wearables, the company's ePOP and other products have the advantages of low power consumption, fast response, light and thin, etc., and have entered the supply chain of AIAR glasses manufacturers such as Meta, Rokid, Thunderbird, and Shanji, as well as smart wearable manufacturers such as Google, Xiaotiancai, and Xiaomi. The company provides ROM+RAM chips for Ray-Ban Meta and is the main supplier. In 2024, the revenue of smart wearable storage will be about 800 million yuan, a significant year-on-year increase. In 2025, with the increase in the volume of AI glasses, the company will deepen cooperation with customers such as Meta, which will drive continuous business growth.

Focus on R&D investment and increase competitiveness in advanced packaging and testing. Focusing on the semiconductor storage industry chain, the company continues to increase investment in technology research and development in the fields of chip design, storage media characteristics research, firmware/software/hardware development, storage test equipment and algorithm development, and continues to build storage packaging and testing capacity to meet business growth needs and evolve to the field of wafer-level packaging and testing, further enhance the company's core competitiveness and extend the company's value chain. The company's R&D expenses in 2024 will be 452 million yuan, a year-on-year increase of 80.75%. Tailai Technology, a subsidiary, has mastered advanced packaging processes such as 16-layer stacked die, 30~40μm ultra-thin die, and multi-chip heterogeneous integration, and supports the mass production of NAND Flash, DRAM and SiP chips.

Earnings Forecast, Valuation and Rating: According to the company's performance report, we have revised down the company's 24-year net profit attributable to the parent company to 176 million yuan (downward revision of 34%). We forecast that the company's net profit attributable to the parent company in 25 years will be 618 million yuan (revised up by 50%), and the net profit attributable to the parent company in the new 26 years will be 780 million yuan. The company's advanced packaging and testing business is expected to build core growth space and maintain an "overweight" rating.

Risk warning: the risk of new product shipments being less than expected, the risk of gross profit margin fluctuations, and the risk of downstream demand being less than expected.