Artificial intelligence superimposed domestic substitution, the storage market is expected to usher in the outbreak of the company's main business for electronic components distribution. In 2022, the domestic and foreign consumer electronics markets represented by mobile phones and personal computers were in the doldrums due to the domestic economic downturn and the weakening of the industry boom and other factors. With the rapid development of cloud computing, Internet and artificial intelligence, the global demand for servers is expanding, and the market scale continues to grow. The global server market is about $123 billion in 2022, up 20 per cent from a year earlier, according to IDC, an international data company. The size of China's server market in 2022 was about US $27.34 billion, an increase of 9.1% over the same period last year.
The company's main authorized distribution products are memory chips, and downstream customers include domestic leading cloud server companies and large ODM enterprises. Under the long-term growth trend of the cloud computing industry, the company's electronic components distribution business is relatively limited, but in the short term, affected by fluctuations in the performance of downstream customers, business growth has slowed down. In 2022, the company achieved revenue of 13.772 billion yuan, an increase of 49.61% over the same period last year, and a net profit of 314 million yuan, an increase of 40.15% over the same period last year. Among them, Lianchuangtai and its subsidiaries achieved a business income of 13.486 billion yuan in electronic components distribution in 2022, an increase of 3.76 percent over the same period last year, and a net profit of 278 million yuan, a decrease of 7.94 percent over the same period last year.
Obtained a number of well-known enterprise agency, high-quality customer resources-rich company has accumulated a large number of high-quality original factory authorization qualifications, has won one of the world's top three industrial memory suppliers SK Hynix, the world's famous master chip brand MTK, the domestic memory control chip field leader Zhaoyi Innovation (GigaDevice) authorized agency. At present, the company has the ability to provide electronic components such as data memory, main control chip, module and so on, and the products are widely used in many fields. According to the announcement of the State Internet Information Office, the products sold by Micron in China failed the network security review. SK Hynix as one of the important memory suppliers, its domestic market share will be increased, and the company as an authorized agent of SK Hynix will also benefit.
In terms of customers, as the authorized agent of many well-known global brands, the company has strong market development ability. products are widely used in cloud computing storage (data center servers), mobile phones, televisions, car products, smart wear, Internet of things and other fields. At present, customers are mainly Internet cloud service providers such as BABA, Zhongba Group, Byte Jump, Huaqin Communications, superfusion and large domestic ODM enterprises, which have achieved the coverage of first-class manufacturers in these fields and have leading customer advantages. At present, it has established a stable cooperative relationship with well-known manufacturers in these industries, especially in the field of memory chips, the company has achieved coverage of China's core Internet enterprises, and the later product line will gradually radiate to other fields.
Downstream demand is under pressure, the semiconductor industry ushered in many opportunities affected by macroeconomic, such as mobile phones, personal computers and other representative of the domestic and foreign consumer electronics market downturn. However, with the rapid development of cloud computing, Internet and artificial intelligence, the global demand for servers is expanding, and the market scale continues to grow. The global server market is about $123 billion in 2022, up 20 per cent from a year earlier, according to IDC, an international data company. The size of China's server market in 2022 was about US $27.34 billion, an increase of 9.1% over the same period last year. IDC expects the server market to continue to grow at a compound annual growth rate (CAGR) of 7.7% in the five years from 2022 to 2027 and reach $178 billion in 2027. In the long run, the server market has a good trend.
The company is expected to create a high-end semiconductor industry chain innovation ecology. The downstream of electronic components is mainly used in the field of electronic products, so the cyclical changes of the industry are closely related to the macroeconomic cycle. From the perspective of industrial cycle, there is a periodic cycle of electronic components, and the profits of the industry are cyclically adjusted with the periodic changes of supply and demand.
On the whole, the electronic components industry continues to be optimistic, and the overall development is on the rise. At present, artificial intelligence, Internet of things, intelligent devices, electric vehicles, blockchain, intelligent devices and other industries are in the early stage of expansion, while 5G communications are about to enter the market on a large scale; traditional industries are also facing renewal and upgrading, such as home appliances frequency conversion, intelligence and other upgrading needs continue to create new market space. The development and upgrading of the industry is not only an opportunity for distributors, but also a challenge. Distributors who can adjust the structure in time and cope with market changes can get better development.
Profit forecast
We are optimistic about the future development of artificial intelligence and a substantial increase in storage demand, in addition, the company downstream binding head manufacturers, broad market prospects, the company's revenue will increase. We forecast that the company's income from 2023 to 2025 will be 151.41 yuan, 169.40 yuan and 18.938 billion yuan respectively, and the EPS will be 0.73,0.87,1.03 yuan respectively. The current stock price corresponding to PE will be 49 times, 41 times and 34 times respectively, covering for the first time and giving "overweight" rating.
Risk hint
Customer orders are lower than expected, storage market demand is lower than expected, supplier dependence risk and so on.