The current situation of the company
Minxin shares issued a fixed increase plan on July 6, with a non-public offering to raise no more than 150 million yuan, with an issue price of 54.99 yuan per share. used for micro-differential pressure sensor R & D project (100 million yuan) and annual production of 6 million automotive and industrial-grade sensors R & D project (50 million yuan).
Comment
MEMS pressure / inertia and other products shipped at a good pace, the price of acoustic sensors is still at a low water level. From the point of view of the company's three major product lines: 1) MEMS pressure sensors are stable in the downstream automobile field, and micro-differential pressure sensors continue to penetrate the e-cigarette market by virtue of the advantages of waterproof, oil-proof, integration and consistency; 2) MEMS inertial sensors are expected to open up a new growth curve outside consumption driven by new applications such as robots in the future. 3) MEMS acoustic sensor, as the company's main source of income, is under price pressure under the dual influence of weak consumer electronics and market competition, but according to the company announcement, the price of acoustic products has recovered to 80-90% of 2021 in the second half of 2022. We believe that the company is a rare leading sensor manufacturer covering the whole industry chain of MEMS in China, with cost-effective and cost advantages. The ODM demand brought about by the marginal recovery of consumer electronics and brand cost reduction is expected to further improve the performance of the company's acoustic sensors.
Layout of car / wearable devices / e-cigarettes and other popular racetracks, high ASP new products may promote profit repair.
We are optimistic about the gross profit repair situation after the company has completed the relevant customer introduction and shipments: 1) in the automotive field, the company has shipped on-board silicon microphone, control panel, pressure module, steering wheel and other applications. The company's annual report shows that its voice control and pressure products have entered a number of domestic Tier 1 suppliers. 2) in the field of wearable devices, benefiting from the development of AIoT, the company's water depth manometer, altimeter and other products have been matured in wearable smart devices and have achieved a stable batch supply; 3) in the field of e-cigarettes, according to ProphecyMarket Insights May data in 2023, the global market demand for e-cigarettes is US $22.45 billion in 2022, and its CAGR is expected to reach 31.1% in the next 10 years. We believe that the company takes the lead in introducing flow meters, flow switches and other products into international well-known e-cigarette customers, which will help them to fully benefit from the global upgrading of e-cigarette consumption and the gradual replacement of traditional devices. At the same time, the company adapts to the market demand and shifts from the consumer electronics side under Maori pressure to the domestic replacement of high process barriers, high ASP category, such as MEMS in cars, which is expected to open new business growth points and optimize profit structure in this year.
Profit forecast and valuation
We basically keep the company's earnings forecasts for 2023 and 2024 unchanged, with the current share price corresponding to 3.4x2026E Pmax S. Based on 5.0x 2026E Ppace S, we use a discount rate of 9.4% to 2023, maintaining the target price of 67.48 yuan, 12% upside over the current stock price, and maintaining the "outperform industry" rating.
Risk
The demand for new products and downstream conditions such as automobiles are not up to expectations, and the progress of non-public offering projects is not as expected.