The company's main business is an IC solution provider, focusing on the distribution of wireless communication, radio frequency, sensors, etc. Since its establishment, the company has been focusing on the distribution, application design, etc. of wireless communication ICs, RF ICs and sensor devices, and is a leading IC products and IC solution provider in China. Currently, the company's main IC suppliers include Qualcomm, Sijiaxun, Anshi Semiconductor, AVX/Kyocera, Hengxuan Technology, etc., and has customers such as Midea Group, Wentai Technology, and DJI. The company won the “Top Ten Chinese Brand Distributors” award for ten consecutive years, reflecting the company's deep accumulation in the electronic components distribution industry. The company's revenue for the first three quarters of 2022 was 1,563 billion yuan, +17% year on year, benefiting from the rapid growth of the company's business in the fields of automotive electronics and the Internet of Things and the improvement of the R&D capabilities of chip solutions.

The company's customized and self-developed chip business is growing rapidly. In May 2022, the company invested in the establishment of Shanghai Runxin Chuangxin Microelectronics Co., Ltd. (the company holds 51% of the shares) and officially entered the field of semiconductor design and testing. The company customized Holacon smart chips for home appliances and TG ultra-low power BLE chips for key customers. Currently, these two customized chips are in the batch shipping stage. The XN3650 temperature sensor control and display chip developed by the company and the XM9823 single-wire three-channel LED constant current driver chip have all been successfully mass-produced and sold on a large scale. In the first half of 2022, the company's “customized and self-developed chip” business achieved sales of 33 million yuan, and the self-developed business achieved rapid growth. In addition to the above products, the company is also custom-developing ADB front smart adaptive headlight control chips.

MEMS speakers are expected to be in high volume. The company set up a new division to enter the new MEMS speaker market.

MEMS speakers can replace traditional electrodes and speaker cavities with silicon wafers and new material process technology to reduce volume and power consumption. Currently, MEMS speakers have begun to be sold overseas. For example, USound glasses made millions of dollars in the US in 2021. TWS headphone head manufacturers are also introducing MEMS speaker technology. For example, at the end of 2022, Lixun Precision chose USound as its strategic supplier of MEMS speakers to supply its TWS headphones with a new ultra-compact hybrid audio module, and the solution is expected to be mass-produced in 2023. MEMS speakers are expected to be used in various fields such as mobile phones, TWS, PCs, and smart homes in the future. Runxin Technology and the National Smart Sensor Innovation Center formed a joint laboratory to jointly develop MEMS technology and promote its mass production. Based on the Innovation Center's 12-inch advanced sensor feature process pilot line, Runxin Technology's MEMS speakers are expected to be released in the second half of 2023, which is expected to become a new growth point for the company.

Teaming up with Strange Moore to create an end-to-end customized Chiplet chip design service platform. Runxin Technology has accumulated many years of experience in the application design, supplier resources, and customer resources of wireless connectivity and processing chips and MEMS sensor chips required for AIOT, which complements SingleMoore's 2.5D and 3DIC Chiplet heterogeneous integrated general core products and dedicated design platforms. The Chiplet products that the two have collaborated on include MEMS sensors, in-memory computing, wireless chip stacking, etc. used in the AIOT field, and the company initially expects low-end products to enter mass production by the end of this year.

Investment advice: Based on the rapid growth of the company's customized and self-developed chips and the forward-looking layout on MEMS speakers and Chiplets, we expect the company to achieve revenue of 20.8/24.8/2.93 billion yuan in 2022-2024 and achieve net profit of 0.6/111/150 million yuan. Based on the closing market value of April 7, the corresponding PE is 83/48/34 times, respectively.

Risk warning: risk of R&D failure; risk of increased industry competition; risk of downstream demand falling short of expectations.