This report guide:

In the first three quarters of 2024, the company's performance was under short-term pressure due to industry adjustments and order rhythms, and gross profit margin and net profit margin continued to increase. The application field of the company's products has expanded to the field of low-orbit satellites and mobile communications, and it has continued to make efforts in multiple dimensions.

Investment Highlights:

Lower the target price to $58.00 and maintain overweight. The company's demand in the downstream traditional aerospace field in the TR module field has fluctuated, and the pace of downstream base station construction has slowed down, and the EPS for 2024-2026 has been lowered to 1.00/1.27/1.53 yuan (the previous value was 1.13/1/28/1.53 yuan), giving 58 times PE in 24 years, and the corresponding target price is lowered to 58.00 yuan, maintaining an overweight rating.

The performance is under pressure in the short term, and the cost control has achieved remarkable results. In the first three quarters of 2024, affected by industry adjustments and order rhythms, the company's performance was under pressure in the short term, with a decrease in revenue from T/R components and RF modules, and the company achieved revenue of 1.814 billion yuan (-35.83%), according to the 2024 interim report, T/R components and RF module revenue was 1.169 billion yuan, RF chip revenue was 88 million yuan, and other chip revenue was 27 million yuan; the net profit attributable to the parent company was 306 million yuan (-31.93%); 2) The company has improved production efficiency and reduced costs through lean manufacturing management improvement, process optimization, automated production technology application and other measures to ensure stable growth in profitability and profit margin, and the company's gross profit margin in the first three quarters of 2024 was 36.39% (+4.14pct); Net profit margin was 16.90% (+0.97pct).

Expand the field of spaceborne TR components and mobile communication terminals, and continue to make efforts in multiple dimensions. 1) T/R components: The company actively promotes the digital transformation of RF component design, continues to carry out key technology research, lays the foundation for the development of a new generation of products, and actively carries out the expansion of T/R component application fields, and has carried out technology research and development and product development in the fields of low-orbit satellites and commercial aerospace, and a number of products have begun to be delivered to customers. 2) RF modules: A number of GaN RF module products will be released in the first half of 2024, and the development and application of a new generation of products in the second half of the year will further enhance the comprehensive competitiveness of devices. 3) RF chips: In 2024, a number of the company's RF integrated circuits have been applied to 5.5G synaesthesia integrated base stations, and the 5G-A synaesthesia base station pilot has driven the sales growth of base station RF chips. WiFi, mobile phone PA and other RF amplification chip products, the performance has reached the domestic advanced level. The company actively promotes the research and development of new products and the expansion of new fields, steadily develops several new materials for the next-generation base station platform, and actively promotes the development and promotion of ODU and satellite communication chips, and some products have entered the customer certification stage.

Catalyst: The construction of satellite Internet is accelerating.

Risk warning: the risk of fluctuation in the growth of downstream large customers.