IoT chip companies expand from electricity to non-electricity
Starting with power carrier communication chips, Lihewei is expanding into non-power fields such as intelligent management of new energy sources, comprehensive energy efficiency management, smart home appliances & whole house intelligence, intelligent lighting, and digital management of intelligent power supplies. The company's products include chips, modules, and application solutions, including terminals and system software.
Unlike ordinary chip design companies, the company focuses on carrier communication chips. Lihewei has complete R&D capabilities from algorithms to chip design to application development. It has been working in the field of power line carrier communication for many years. The power line chip supports DC and AC power supply, supports multi-standard applications, and provides stable and reliable “last kilometer” communication connections and smart device access for the Internet of Things, smart homes, etc.
The dual-mode chip replacement began in 2023. The company has obtained the HPLC+HRF high-speed dual-mode communication chip independently developed and designed by the dual-mode communication chip certification company and has passed the National Grid high-speed dual-mode chip-level interconnection test and obtained relevant test reports. In 2018, the State Grid began replacing single carrier chips, and 2023 is the starting year for dual-mode replacement of single carriers. The company is expected to use product and technology upgrades to continue to increase its supply share in the national power grid sector.
The digital economy drives demand in non-electricity sectors and is more imaginative than power grids. The digital economy is a key force driving profound changes in production methods, lifestyles, and governance methods.
With the improvement of people's living standards, the requirements for “speed, range, and stability” of intelligent connectivity have increased. Power carrier communication technology meets these requirements exactly, and there is no need to rewire, just use the original AC/DC power lines.
With sufficient in-hand orders, 2023Q1 is expected to start breaking out of its trough
As of Q3 2022, the company's on-hand orders were 165 million yuan, an increase of 61.32% over the previous year. 2022Q4 has been affected by the pandemic, and some order revenue confirmation is likely to be pushed to 2023Q1.
Investment advice: The company's revenue for 2022-2024 is estimated to be 503/797/1,212 million yuan respectively, an increase of 39.6%/58.4%/52.1%, and net profit of 0.71/121/170 million yuan respectively, an increase of 68.6%/70.1%/41.0% over the previous year. The current price corresponds to 31 times PE in 2023, maintaining the “buy” rating.
Risk warning: The national grid tender fell short of expectations, and the development of non-electricity business was slow.