Event

On April 11, 2025, Montage Technology announced its 2024 Annual Report and 2025 First Quarter Forecast. In 2024, the company will achieve operating income of 3.64 billion yuan, a year-on-year increase of 50.2%, a net profit attributable to the parent company of 1.41 billion yuan, a year-on-year increase of 213.1%, and a net profit of 1.25 billion yuan, a year-on-year increase of 237.4%. The company expects that the operating income in a single quarter in 1Q25 will be 1.22 billion yuan, a year-on-year increase of 65.8%, and the net profit attributable to the parent company in a single quarter is expected to be 510 million yuan ~ 550 million yuan, a year-on-year increase of 128.3% ~ 146.2%, and the net profit attributable to the parent company is expected to be 485 million yuan ~ 525 million yuan in a single quarter, a year-on-year increase of 120.8% ~ 139.0%.

Eight consecutive quarters of quarter-on-quarter growth, a new chapter in the capacity chip

The company's revenue in 4Q24 was 1.07 billion yuan, an increase of 40.4% year-on-year and 17.9% quarter-on-quarter, and it is expected that the revenue in 1Q25 will be 1.22 billion yuan, an increase of 65.7% year-on-year and 14.4% quarter-on-quarter. Since the company's net profit attributable to the parent company bottomed out in 1Q23, it has achieved quarter-on-quarter growth for 8 consecutive quarters, and the net profit attributable to the parent company in 1Q25 was 5.1~550 million yuan, a record high. The company's interconnection chips continued to maintain rapid growth, with revenue of 970 million yuan in 4Q24, up 40.4% year-on-year and 14.5% month-on-month, and revenue of 1.14 billion yuan in 1Q25, up 63.9% year-on-year and 17.2% month-on-month.

In 2024, the company's performance will achieve significant growth, mainly benefiting from: 1) the downstream penetration rate of DDR5 has increased and the subgeneration continues to iterate, and the shipment of memory interface chips of the second generation exceeds that of the first subgeneration; 2) Three high-performance capacity chips (PCIe Retimer, MRCD/MDB and CKD) began to be shipped on a large scale, with a total sales revenue of about 420 million yuan in 2024, a year-on-year increase of 8 times.

In the first quarter of 2025, the company expects to achieve significant growth in operating performance, mainly due to the following three reasons: 1) benefiting from the trend of the AI industry, strong industry demand, DDR5 penetration rate continues to increase, the company's DDR5 memory interface and module supporting chip shipments have increased significantly, and the proportion of second- and third-generation RCD chip shipments has increased, driving the company's memory interface and module supporting chip sales revenue to increase significantly; 2) The total sales revenue of the company's three high-performance transportation chips (PCIe Retimer, MRCD/MDB and CKD) was 135 million yuan, a year-on-year increase of 155%; 3) With the increase in the proportion of sales revenue of DDR5 memory interface chips and high-performance transportation capacity chips, the gross profit margin of the company's interconnection chip product line has further increased.

Investment Advice

With the industry trend of AI, the penetration rate of DDR5 and the shipment of supporting chips will increase, and the company's "capacity" chip products such as PCIe 5.0 Retimer, MRCD/MDB, CKD chip scale shipments, we expect the company's net profit attributable to the parent company in 2025-2027 to be 24.5, 34.1, and 3.96 billion yuan, and the corresponding EPS will be 2.14, 2.98, and 3.46 yuan respectively, corresponding to 2025 On April 11, the company's closing price PE was 35.1, 25.2, and 21.7 times, maintaining a "buy" rating.

Risk Warning:

The progress of server/PC CPU iteration is not as expected; DDR5 penetration is lower than expected; The application of new technologies is not as expected; Geopolitics affects supply chain stability; Market competition has intensified.