Event: on January 21, the company announced its 2022 performance forecast that its revenue in 2022 was 5.3-580 million yuan, an increase of 30.10%-42.37% over the same period last year; and the net profit of its parent was 0.85-110 million yuan, an increase of 21.07%-56.68% over the same period last year.

The automobile chip expands rapidly, the revenue continues to grow. 22H1's automotive electronics and industrial control business accounts for 22.98% of business revenue. In the past 22 years, the company has continuously adjusted its product structure and actively opened up markets and customers around key areas such as automotive electronics and national major demand applications. Among them, more than 4 million automotive electronic chips have been sold, and shipments have increased more than tenfold over the same period last year. The rapid expansion of automotive electronics business has driven the company's overall revenue growth.

The layout of automobile chip is comprehensive, and the advantage of first-mover is obvious. The company's automotive chip product line covers a relatively complete range and has realized product serialization in many directions, such as body control, powertrain control, domain controller, new energy BMS control and specification-level safety MCU, etc.; among them, the company's automotive electronic body control chip and powertrain control chip have been paid attention to and order support by domestic automotive machine manufacturers and Tier1 automotive electronic module manufacturers in the product development stage, with obvious first-mover advantages. On January 21, 23, the company announced that more than 4 million automotive electronic chips could be shipped and loaded. On August 31, 22, the company announced that it had successfully developed a new generation of automotive electronic powertrain and new energy BMS control chip (CCFC2007PT chip) based on independent PowerPC architecture C*Core CPU core. It has completed the research and development, production and marketing application of automotive domain controller chip CCFC2016BC. Has successfully developed high, medium and low product series of vehicle specification-level safety MCU chips. At the same time, the company is developing automotive gated mixed signal chips, airbag ignition chips and new energy vehicle noise reduction chips, which is expected to continue to provide a source of revenue growth in the future.

Xinchuang chip technology strength is strong, seize the opportunity of domestic substitution. The company's Xinchuang chip mainly includes cloud application chip and end application chip, in which cloud application chip includes cloud security chip, memory control Raid chip and edge computing chip; end application chip focuses on biometric identification, financial security and Internet of things security and other fields. The performance of the company's cloud security chip has reached the international advanced level, has entered the national Xinchuang catalogue and obtained the national secret model product certificate, and has been adapted to the home-made CPU chip motherboards such as Kunpeng, Longxin, Feiteng and Zhaoxin in the Xinchuang testing project. The Raid controller chip developed by the company will be put into mass production around the end of 2022, which will provide support for the localization of key chips for storage servers in China. At the same time, the company is developing a variety of new products of edge computing, security and network communication integrated processing controller chips, using independent 32-bit or 64-bit four-core PowerPC instruction architecture CPU core, integrated high-performance cryptographic algorithm engine and network data acceleration engine, with gigabit network, 10 Gigabit network, PCIe3.0, USB3.0, RapidIO2.0 and other high-speed interfaces.

Embedded CPU technology continues to provide domestic alternative technology support. The company has successfully implemented more than 40 CPU cores in 8 series based on the three instruction sets of M*Core, PowerPC and RISC-V. As of June 30, 22, it has provided more than 144CPU IP licenses to more than 101customers and chip customization services to more than 80 customers. The company has established good cooperative relations with subsidiaries of State Grid, Southern Power Grid, China Electronics and other large central enterprise groups, research institutes of Chinese Academy of Sciences and Tsinghua University, and many domestic well-known enterprises such as BYD and Weichai Power. Technical strength and product performance have been widely recognized.

High-intensity R & D investment lays the foundation for sustainable development. In the first three quarters of 21 / 22, the company's R & D expenditure rate was 21.96% 27.64%. In 22 years, the company seized the opportunity of domestic replacement of high-end automotive electronic chips and highly reliable memory chips, focusing on high-end automotive electronic chips, highly reliable memory control chips and other fields. carry out high-intensity R & D investment and greatly increase the number of R & D personnel, resulting in an increase of about 60 million yuan in R & D expenditure over the previous year, an increase expected to exceed 50%. According to the estimated median revenue of 555 million yuan in 22 years, the R & D expenditure rate of the company in 22 years is expected to be 26.93%. In addition, due to the impact of the 22Q4 epidemic, a number of chip customization service projects failed to get customer acceptance in time, which will be postponed to 2023.

Profit Forecast: we estimate that the company's operating income from 2022 to 2024 will be RMB 561,14.1, respectively, and its net profit will be RMB 100.32 billion, respectively, maintaining the "recommended" rating.

Risk hints: (1) market competition risk; (2) downstream demand lower than expected risk; (3) entrusted processing production and supplier concentration risk; (4) new product development is less than expected risk.