The company has been ploughing for more than 20 years, focusing on the research and development and application of domestic self-controllable embedded CPU technology. Based on Motorola authorized M*Core instruction set, IBM authorized PowerPC instruction set and open source RISC-V instruction set, the company has successfully developed more than 40 CPU cores of 8 series based on the above three instruction sets, forming a rich embedded CPU IP reserve.
The company adopts the Fabless model, focusing on product development and sales, focusing on independent and controllable areas.
The company attaches importance to R & D investment and technology accumulation. In the past five years, R & D investment accounted for more than 20% of operating income, the number of R & D personnel continued to increase, and effective patents and software copyright increased year by year.
The company's revenue and homing net profit have been growing rapidly for five consecutive years, and the homing net profit is under short-term pressure. From 2017 to 2022, the company's revenue increased from 131 million yuan to 525 million yuan, with an average annual compound growth rate of 32%.
The company focuses on IP licensing, chip customization services and independent chip and module products and IP licensing three major businesses, fully support the company's long-term, currently chip customization services account for the highest proportion.
IP authorization business: the technology of embedded CPU is difficult to realize, and it has been monopolized by foreign leading enterprises for a long time. At present, most of the domestic chips are based on the IP authorization of foreign companies, and the core technology and intellectual property rights are controlled by others. ARM occupies a dominant position in this field, and the open source RISC-V ecology is gradually growing, which is expected to replace ARM. The company is rich in instruction architecture, and the customers with core self-research IP,IP authorization are mainly mature chip design companies and IDM.
Chip customization service: the company lays out the field of chip customization and provides customers with full-process services. The company's chip customization service is divided into customized chip design service and customized chip mass production service, the two major businesses go hand in hand. The core of customized chip design service is design, delivering samples to customers; the core of customized chip mass production service is mass production, delivering products to customers. The company's chip customization service business has grown by leaps and bounds, with revenue growing from 32 million yuan in 2017 to 257 million yuan in 2022, and CAGR reaching 51.7 percent.
Independent chip and module products: vehicle MCU chip has been monopolized by overseas giants for a long time, with high industry barriers, long product introduction cycle and a long way to go for domestic replacement. The company deeply arranges car MCU chips, independent innovation to achieve domestic substitution, the company focuses on major customers, automotive electronic chip products cover a comprehensive, have entered BYD, Chery, Geely and many other automotive machine manufacturers, in more than 20 independent and joint venture brand cars to achieve batch application. In addition, the company is one of the major domestic suppliers of cloud security chips and financial POS security chips, the company looks forward to the layout of RAID chips, and successfully develops Raid control chip CCRD3316, breaking the long-standing situation of Raid chips being monopolized by foreign companies.
Investment suggestion: the company deeply ploughs embedded CPU IP, makes every effort to achieve independent control, and continues to expand new customers. It is estimated that the company will achieve a net profit of 0.54 million yuan from 2023 to 2025, corresponding to the PE178.48/94.26/51.65 times. Cover for the first time, giving a "buy" rating.
Risk Tip: the risk of technological change: if the company fails to follow the development trend of new technology in time, it may affect the profitability of the company. The risk of new product customer expansion is less than expected: if the company's products fail to meet customer needs, it will affect the company's product sales. The risk of intensified market competition: at present, the company occupies a first-mover advantage in the field of automotive chips by virtue of technology accumulation, and with the R & D breakthroughs of other domestic manufacturers, it may affect the leading position of the company's related products in China.