Main points of investment
On September 15, 2023, the company issued the first and second phases of the 2023 stock option incentive plan (draft).
With the simultaneous issuance of the two-phase incentive plan, 23H2 design business is expected to increase month-on-month. 1) Phase I: this incentive plan intends to grant no more than 7.72 million stock options to the incentive target, accounting for 0.65% of the company's total share capital at the time of the announcement. A total of 785 people were involved, including Jia Yuan, Wu Xiaodong, Wang Song, Ren Bing and 781 middle managers and core technical (business) personnel. The exercise price is 78.97 yuan per share.
2) Phase II: this incentive plan intends to grant no more than 12.28 million stock options to the incentive object, accounting for 1.04% of the total share capital of the company at the time of the announcement. A total of 2126 people are involved, all of whom are middle managers and core technical (business) personnel. The exercise price is 78.97 yuan per share.
In terms of assessment objectives, the two stock option incentive plans are aimed at the revenue of semiconductor design business from 2023 to 2025. The trigger value is from 2023 to 2025, the revenue of semiconductor design business will reach 165 / 19.5 billion yuan, and the target is that from 2023 to 2025, the revenue of semiconductor design business will reach 180.22 billion yuan.
In terms of target values, revenue from semiconductor design business is expected to grow by 9.71% year on year in 2023 (revenue from this business is 16.407 billion yuan in 2022); revenue from 23H2 semiconductor design business is expected to be 10.588 billion yuan, up 45.59% year-on-year (revenue from 22H2 business is 7.273 billion yuan) and 42.85% month-on-month (revenue from 23H1 business is 7.412 billion yuan).
CIS product matrix enriches the hunting market segment, and the shift of the focus of the panel industry supports the long-term development of domestic display driver chips.
The company's semiconductor design business includes three parts: image sensor, touch and display, and simulation. 1) Image sensors contribute most of the revenue of semiconductor design business, and 23H1 accounts for 84.11% of the revenue. The company has formed a rich CIS product matrix in the mobile phone field. The OV50H (50MP pixel, 1amp 1.3 inch, 1.2 μ m pixel size) uses PureCel? Plus-S wafer stacking technology and the first Hqqp V QPD autofocus technology bring high image quality to wide-width and ultra-wide rear shots of flagship and high-end smartphones. OV50E (50MP pixel, 1cm 1.5 inch, 1.0 μ m pixel size) has low noise, 100% phase detection and high dynamic range support for single exposure, focusing on the rear camera of mid-to-high-end smartphones. In addition, the company also provides OVB0B and OVB0A two image sensors with up to 200 million pixels to meet some consumers' extreme pursuit of ultra-high pixels. 2) Touch and display is the second growth point of semiconductor design business, and 23H1's revenue in this sector increased by 133.50% month-on-month. In the long run, as the focus of the panel industry chain shifts to Chinese mainland, the demand for domestic display-driven chips is growing with strong certainty. In the short term, the market sentiment of the display driver chip has bottomed out and rebounded; according to the performance and the latest guidance of the manufacturer of Chinese mainland display driver closed test head Tech and Huicheng shares Q2, show that the driver industry has hit bottom in 23Q1, 23Q2 has picked up somewhat, and 23H2 is expected to continue to recover.
Investment suggestion: we maintain the original performance forecast for the company. It is estimated that the operating income from 2023 to 2025 will be 205.44 and 251.5 billion yuan, with a growth rate of 2.3%, 22.4% and 19.2%, respectively. The homing net profit will be 15.02 yuan and 28.52 billion, with a growth rate of 51.8%, 89.8% and 41.9%, respectively, and the corresponding PE will be 27.7 times. With the mass production and delivery of a number of highly competitive new products represented by OV50H, and the launch of a number of flagship models in the second half of the year to stimulate the recovery of the mobile phone market, the company's profitability and revenue scale are expected to hit bottom and pick up. Continue to recommend and maintain a "buy" rating.
Risk tips: the recovery of downstream market demand is not as expected, the process of product development or introduction is not as expected, market competition intensifies, and so on.