Report summary:
Deeply cultivate the core technical capabilities of AIOT audio, continue to motivate talents and invest heavily in R&D. The five core technicians all have many years of experience in technology research and development in the AIOT audio field. Many of their core patented technologies are independently innovated. The annual investment in R&D accounts for more than 25% of revenue. The product matrix is comprehensive, and major customers continue to make breakthroughs. At the same time, they continue to increase the motivation of core employees through equity grants to maintain the continuous enthusiasm of the R&D team.
Demand from traditional main businesses continues to recover, the local share of the competitive pattern continues to rise, and new AIOT ecosystems are constantly emerging. The penetration rate of demand-side TWS headphones continues to increase, from 0.66% in 2016 to 28.6% in 2022. With the development of next-generation LE Audio technology, product iterations will continue to drive the penetration rate of TWS headsets. Smartwatches will also maintain rapid growth. In particular, the company's breakthrough in the Indian market has increased the APRU value of the company's individual products. Global smartwatch shipments will maintain a compound growth rate of nearly 20% over the next 3 years, reaching 258 million units in 2025, and the market size will reach 3.2 billion yuan; at the same time, based on AIOT, based on AIOT A new ecosystem of audio applications has emerged, and the company's smart audio SoCs are advancing rapidly in rapid markets such as smart speakers, voice recorders, interactive educational products, and smart watches. Furthermore, in the context of domestic substitution on the supply side, it will accelerate the penetration of the company's products into leading equipment manufacturers, gradually improve product performance, and narrow the gap with European and American leaders.
ChatGPT has opened Pandora's box, and the AIOT core has become the key. ChatGPT has opened Pandora's box, IOT has evolved into AIOT, and the application of the ChatGPT big model after training on the data set will be AIOT terminals with edge computing capabilities. The company's AIOT audio core has entered many major customer terminal products. Its product forms are rich and comprehensive, and the product iteration capability is high. The SoC/DSP dual-core architecture will be flexible in the evolution of ChatGPT. In particular, under the future multi-modal general model, the AIOT core will become a key key.
First coverage, giving a “buy” rating. Traditional industries selected typical IC designers in the semiconductor industry, such as Ruixin Micro, Jingchen Co., Ltd., Quanzhi Technology, Hengxuan Technology, and Zhongke Lanxun, etc. as comparable companies. According to Wind's consistent forecast data, the average PE of the industry in 2023 was 46.2 times, respectively. We are optimistic about the long-term growth of the company's performance. Without considering the AIOT valuation premium, combined with the company's high growth rate in 2022-2024, the company corresponds to a reasonable valuation of 2024 50 times.
Risk warning: downstream demand falls short of expectations, supply chain affected by trade frictions