China's leading FPGA chip supplier, creating a banner for FPGA localization. Anlu Technology was founded in 2011. Its main products include the SALPHOENIX high performance product family, the SALEAGLE high efficiency product family, the SALELF low power product family, and three types of FPSoC products in the low power SALSWIFT family. The company advocates a R&D strategy combining software and hardware, and independently develops supporting EDA software, including TangDynasty software that supports FPGA development and FutureDynasty software that supports FPSoC development, providing strong support for the application design of all FPGA products based on Anlu Technology. The company's directors and core technicians have rich experience in software and hardware, which are deeply compatible with the company's various business lines and provide full technical feasibility for the R&D layout. The company's main business revenue in 2018-2022 was 0.3/1.2/2.8/6.8/1.04 billion yuan respectively, corresponding to a compound growth rate of 146%. The strong driving force of domestic substitution protected the company's performance.

The FPGA market space has exceeded industry expectations, and the future market space is still broad. FPGA is a flexible and universal “universal” chip. Its biggest feature is programmability; at the same time, because of its structural characteristics, FPGA is suitable for parallel computing, and focuses on energy consumption and cost performance advantages with lower power consumption. These advantages make FPGAs widely used in downstream fields such as industrial control, network communications, consumer electronics, data centers, automotive electronics, and artificial intelligence. In 2022, benefiting from the development of the data center industry, the FPGA market experienced explosive growth. The year-on-year growth rate was close to 30%, far exceeding Frost & Sullivan's previous forecast of 15.7%. According to the market forecast given by Intel (Altera), a leading FPGA manufacturer, in mid-2023, the market growth is expected to exceed 16% in 2023. The growth momentum is improving over the next 5 years, and it is expected to continue to maintain a compound annual growth rate of more than 10%.

The company's anchor logic units have been replaced step by step, and new material numbers have been introduced to expand new markets. The “main battleground” of the downstream field that the company targets focuses on industrial control and communications. Since the company is currently mainly based in the domestic market, the industry's domestic substitution trend has contributed an important driving force to the company's performance. Many fields, including servo drives, LED displays, and base station signal processing, are in urgent need of domestic breakthroughs. The company's FPGA is still in the middle and low end market development stage, and there is a certain gap in chip manufacturing, LUT capacity, and ecological construction. At present, the company's Phoenix series has entered the 28nm node, and the PH1A400 product has been exhibited at the 2023 Munich Shanghai Electronics Show. As more advanced models enter more high-end application fields, it is expected to expand new incremental space for the company's performance.

Investment suggestion: We expect the company's revenue for 2023-2025 to be 8.76/14.35/1,890 billion yuan, corresponding to the current PS multiplier of 17.96/10.96/8.32. Considering that the company is a leading manufacturer of domestic FPGAs, it is expected to benefit from the domestic FPGA substitution trend for a long time in the future, and is given a “buy” rating for the first time.

Risk warning: risk of declining performance or loss, risk of macro and industry factors, risk of increased industry competition, risk of product development failure, or failure of industrialization to meet expectations.