【卓胜微】Revenue grew while GPM deteriorated due to intense competition and capacity ramp-up

卓胜微(300782)

Maxscendreported1H24results.Revenuegrew37%YoYtoRMB2.3bnfromalowbasein1H23,drivenbyclients’restockingbehavior.GPMdeclinedto42.1%,down6.9pptfrom1H23.Marginerosionwasmainlydueto1)anunfavorablerevenuemixtowardshighermodulesales,2)rampupinfabproductionand3)intensifiedcompetition.Despiteaslowrecoveryinconsumerdemandandprolongedreplacementcycleofhandsets,weexpectMaxscendtooutperformitspeers,withitsuniquefab-litemodeltosupport1)supplychainsecurity,2)betterproductperformanceand3)potentialincostoptimizationonceutilizationreachesahigherlevel.MaintainBUYwithadj.TPatRMB100.

WeremainoptimisticthatMaxscend’smodulebusinesswilldrivefuturegrowth.Bysegment,discreteproductsrevenuegrew15%YoYin1H24,whilemoduleproductsgrew81%YoY.Modulerevenuecontributionincreasedsteadilyfrom29%/36%in2022/23to45%in1H24.Weexpectmodulesalestogrowfurtherby37%/30%YoYin2024/25E,drivenbythemodulizationtrendinRFFEsector.WeholdapositiveoutlookforMaxscendwiththecompany’srecentdevelopmentinfilters,whichwillenhanceMaxscend’scapabilitiesinmeetingclients’customizationandminiaturizationrequirementsthateventuallyleadtomarketsharegains.

WeseedomesticRFFEsuppliersareallfacingASPpressuresfromadeterioratingindustryenvironment,ascompetitiongetsintensified.However,wethinktheimpactwillbemitigatedeventuallyasthesectorcontinuestoconsolidate.Inaddition,Maxscendisincreasingitshigh-endproductcoveragewithitsownfabricationcapacities.Lookingforward,thelaunchofnewproductswillbeinfocus.Wethinknewproductramp-upwillweighonGPMinthenearterm.WeprojectoverallGPMtobe41.9%/42.2%for2024/25E.

MaintainBUYrating.Wecut2024/25Eearningsforecastsby31%/27%onGPMpressurefromlonger-than-expectedpricewar.TPistrimmedtoRMB100,basedon44.5x2025EP/E,whichis1SDbelow1-yearhist.avg.fwd.P/E,givennear-termGPMpressuresanduncertaintiesinmobilerecovery.WethinkMaxscendwillbeakeybeneficiaryofthesemiconductorlocalizationtrendinChina.Despiteachallengingmarket,thecompany’sgrowthstoryisintact,inourview.Itsfabricationcapabilitieswillserveasapillarstoneforitslong-termdevelopment.