EB SECURITIES: Shanghai Fudan (01385) achieved significant year-on-year growth in revenue and profit in the third quarter of 25Q3, maintaining a "buy" rating.

EB Securities released a research report stating that SHANGHAI FUDAN (01385) has high reliability in the field of storage and the demand is recovering. The company is also actively expanding into new areas such as automotive and industrial sectors. However, considering the intense market competition and the impact of company assets impairment losses over 25 years, the adjusted net profit forecast for 25-27 is 530 million/976 million/1.191 billion yuan (a decrease of 26.4%, -1.1%, and +7.2% respectively compared to the previous forecast), with corresponding year-on-year growth rates of -7%, +84%, and +22%. The closing price is 39.5 Hong Kong dollars, corresponding to forecast P/E ratios of 56x/30x for 25/26 years. With the acceleration of domestic substitution of FPGA chips and the recovery of demand in the memory business, the rating is maintained at "hold". The company achieved a revenue of 3.024 billion yuan in the first three quarters, a year-on-year increase of 12.7%; revenue in 25Q3 was 1.186 billion yuan, a year-on-year increase of 33.28%. The growth in Q3 revenue was mainly driven by sales of non-volatile memory chips, smart meter chips, FPGA and other chip businesses, with revenue growth of 44%, 42%, and 34% respectively, while revenue from security and identification chips increased by 16% in Q3. In terms of profit, the comprehensive gross profit margin for the first three quarters was 58.47%, a year-on-year increase of 3.42%; the comprehensive gross profit margin for 25Q3 was 61.06%, a year-on-year increase of 8.91%, due to revenue growth combined with product structure optimization. The net profit attributable to the parent company in the first three quarters was 330 million yuan, a year-on-year decrease of 22.69%, due to the impact of a decrease in government subsidy special inspection and VAT calculation offset, increased provision for memory price declines, and impairment provision for intangible assets. The net profit attributable to the parent company in 25Q3 was 137 million yuan, a year-on-year increase of 72.69%, with a corresponding net profit margin of 12%.