Guoyuan**shares***Peng Qi recently conducted research on Montage Technology and released a research report "Montage Technology 2023 Annual Performance Express Review: DDR5 and AI are Expected to Boost the Company's Performance Resilience", this report gives Montage Technology a ** rating and believes that its target price is 6490 yuan, the current stock price is 5077 yuan, the expected range of ** is 2783%。
Montage Technology (688008).
Event: Montage Technology Releases 2023 Annual Results Announcement: The company's operating income during the reporting period was 228.6 billion yuan, down 37 percent from the same period last year76%, and the net profit attributable to owners of the parent company was 45.1 billion yuan, down 6530%, net profit attributable to owners of the parent company after deducting non-recurring gains and losses was 37 billion yuan, down 5811%。
Fourth-quarter operating income was 76.1 billion yuan, down 379%, an increase of 2726%, and the net profit attributable to owners of the parent company was 21.7 billion yuan, down 27. from the same period last year67%, an increase of 4276%。
Key takeaways. In the third quarter, the company's main DDR5 interconnection chip business began to return to the growth track, and the fourth quarter showed good growth potential. With the recovery of general-purpose server shipments this year and the continuous improvement of the penetration rate of DDR5DRAM in server applications, the company's interconnection chip business will continue to maintain a good growth trend. We expect that the penetration rate of DDR5DRAM in server applications will increase from 13% at the end of 23 to 60%-65% at the end of 24, and the unit price and gross profit of RCD DB chips supporting DDR5DRAM are higher than those of DDR4 related products, and the improvement of DDR5 penetration rate is an important driving force for the company to achieve high performance growth in 24 years. In addition, according to our estimates, the company's market share in the global DDR5 interconnection chip market has a strong increase in the fourth quarter.
The development of AI is expected to bring new business volume. As the demand for server computing power continues to increase, in addition to the improvement of the computing power of major computing power chips, the improvement of the transmission efficiency of the server system has also become a top priority. The company's reserve of PCIe CXLretimer and MXC business is expected to usher in an explosion this year and next year. In the second half of this year, with the increase in the volume of AI PC, it will drive the company's CKD chip business and form a new market opportunity.
Investment Advice & Profitability**.
The net profit attributable to the parent company of our company from 2023 to 2025 is 45/14.8/26.700 million yuan, considering that the inflection point of the company's main business is clear, and the business development in the direction of AI servers and AIPC and other intelligent hardware is expected to drive high growth in 24-25 years, with the company's 24-year valuation of 50x, the corresponding target price is 649 yuan, maintain the "** rating."
Risk Warning. Upside risks: lower-than-expected capacity expansion by competitors; DDR5 penetration is faster than market expectations; CXL DRAM shipment acceleration; Accelerated AI PC Penetration;
Downside risks: lower-than-expected DDR5 penetration; The intensification of competition in the industry accelerates the downturn; Accompanying chips such as PMIC, etc.
*According to the calculation of the research report data released in the past three years, the research team of Liu Shuangfeng of China Securities Construction Investment Co., Ltd. has conducted in-depth research on the stock, and the average accuracy of the stock in the past three years is as high as 9738%, and its **2023 attributable net profit is 42.7 billion, and the **PE converted according to the current price is 13531。
The latest profit** breakdown is as follows:
A total of 13 institutions have rated the stock in the last 90 days, with ** rating 12 and 1 overweight rating; The average institutional price target over the last 90 days is 7181。
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