Key points of investment
Next Wednesday (April 26), a company listed on the Science and Technology Innovation Board, “Huizhiwei” will ask for a quote.
Huizhiwei (688512): Huizhiwei is a chip design company that provides RF front-ends for smartphones, the Internet of Things, etc. The company achieved operating income of 207 million yuan/514 million yuan/357 million yuan respectively in 2020 and 2022, YOY was 243.05%/147.93%/-30.60% in that order, and the three-year compound annual revenue growth rate was 80.72%; it achieved net profit of -96 million yuan/-318 million yuan/-305 million yuan. The company expects the amount of net profit attributable to shareholders of the parent company to be -78.3362 million yuan to -68.512,200 yuan in the first quarter of 2023, a year-on-year loss of 0.17% to 12.69%.
Investment highlights: 1. The company's RF front-end chip industry has broad space, low degree of localization, and a good competitive pattern among domestic manufacturers. According to Mobile Experts, the scale of the global RF front-end industry reached 15.708 billion US dollars in 2020, and the scale is expected to continue to grow with the further spread of 5G communications. For a long time, the market has been dominated by international manufacturers such as Skyworks, Qorvo, Broadcom, Qualcomm, and Murata. The combined global market share of these manufacturers in 2022 was 80%. In addition to the company, the only major domestic RF front-end chip manufacturers are currently Zhuo Shengwei, Weijie Chuangxin, Feixiang Technology, etc. Since the domestic integrated circuit industry started late, there is still plenty of room for localization in this field. For example, the localization rate of L-PAMIF for the new 5G band is less than 9.7%, and the domestic L-PAMID field is still empty. 2. The company's technological innovation ability is outstanding. With power amplifiers as the core, the company continues to promote technological and product innovation: 1) The company adopted the reconfigurable RF front-end technology route of the “insulating silicone+gallium arsenide” material system and innovatively integrated digital-analog hybrid circuits on insulated silicon wafers. Compared with the 4G MMMB power amplifier module of the traditional technology route, the product under the reconfigurable technology scheme reduced the usage area of gallium arsenide wafers from 1.8 square mm to 0.7 square mm. The company has relied on this technology to optimize overall costs while obtaining excellent RF performance. The company has relied on this technology to re-launch 5G Of the cultivated frequency band MMMB PAM and 4G LTE reconfigurable RF front-end products; 2) In 2020, the company took the lead in large-scale sales of L-PAMIF products among domestic manufacturers and applied to OPPO mobile models. In addition, development and mass production of various new single-band L-PAMIF products progressed smoothly; in the field of L-PAMID where domestic manufacturers have a gap, the company's low-band L-PAMID products are already in the customer sample submission verification stage, and progress is leading in internal commissioning of mid- and high-band products. 3. The management's rich industry experience and the second phase of the Big Fund's support may help the company develop in the long term. Li Yang, the chairman of the company, was a former Skyworks engineer, the world's leading RF front-end, and has extensive experience in the industry. Furthermore, as a leading domestic manufacturer of RF front-end chips, the company received a second phase of capital injection from Big Fund in the B+ round of financing. Currently, Big Fund Phase II holds 6.54% of the company's shares.
Comparison with listed companies in the same industry: The company is mainly engaged in the design of RF front-end chips. According to business similarity, Weijie Chuangxin, Zhuo Shengwei, and Aiwei Electronics were selected as comparable listed companies. Looking at the comparable companies mentioned above, the average revenue scale of the industry in 2022 was 2,930 billion yuan, the comparable PS-TTM (arithmetic average) was 11.03X, and the gross sales margin was 40.61%; in comparison, the company's revenue scale and gross sales margin were lower than the industry average.
Risk warning: There is still a possibility that companies that have begun the inquiry process will not be able to go public due to special reasons; company content is mainly based on the content of prospectus and other public information; there is a risk that the selection of listed companies in the same industry is not accurate enough; there may be interpretation deviations in the selection of content data. The specific risks of listed companies are shown in the text.