Leading domestic security CIS enterprise, horizontal expansion in various fields. The company's main products are high-performance CIS chips, which are deployed in many high-tech application fields such as security monitoring, machine vision, and intelligent automotive electronics. In terms of equity, in addition to receiving investment from industrial investment companies such as the National Integrated Circuit Fund and Hubble Innovation, upstream and downstream customers such as Samsung, Hynix, Xiaomi, and Hikvision have all invested, reflecting the recognition of the company by the industrial chain. In terms of revenue, the company's revenue in 2022 was 2,483 billion yuan, down 7.67% year on year. Revenue for the first three quarters of 2023 was 1,773 billion yuan, up 7.16% year on year. In terms of net profit, the company's net profit for 2022 was -83 million yuan, and the company's net profit for the first three quarters of 2023 was -65 million yuan. As of 2023H1, when the company's main smart security business was sluggish due to poor industry prosperity and revenue fell 16.41% year on year, the company's revenue in the automotive electronics and consumer electronics sectors increased by 63.08% and 89.15% year on year, respectively.

Analysis of CIS application trends and market competition. 1) Security: High resolution has become the development trend of high-end security CIS products, and the gradual increase in the complexity of security video surveillance systems also places higher demands on CIS. In terms of market competition, domestic companies have an advantage in sales and shipment volume, but there is an urgent need to transform their products to high-end products.

2) Machine vision: Machine vision can give machines the ability to “see” and “recognize”, and global shutter technology has broad application prospects. In terms of market competition, in the rapid expansion of the machine vision CIS market, domestic manufacturers Stevie and Howie (Well) have a combined global market share of more than 70%; 3) Smartphones: the number of smartphones equipped with stand-alone cameras is growing slowly, and there is room for improvement in the CIS pixels of some high-end models. In terms of market competition, due to demand, the mobile phone CIS market size continues to be under pressure. Sony and Samsung occupy the main market share, and domestic manufacturers urgently need a breakthrough; 4) Automotive electronics: the transformation of intelligent automobile is deepening, and the penetration of intelligent driving functions such as ADAS and urban NOA is driving up the volume and price of in-vehicle CIS. In terms of market competition, as the size of the automotive CIS market continues to rise, Ansemi and Vail currently occupy major market shares, but they still have to face challenges from other manufacturers such as Sony and Samsung.

Using technology as a moat, collaborative development in various fields. The company's core team has a deep technical background and has worked for world-renowned companies such as Micron, Aptina, and Howell. In the field of security, the company had the highest shipment volume in the world in 2020 (according to the Frost & Sullivan caliber), and is technologically stocked with SFCPixel? Core technologies such as patented technology and NIR+ technology for near-infrared sensitivity. Customers include well-known domestic and foreign companies such as Dahua Co., Ltd., Hikvision, Fluorite Network, etc.; in the field of machine vision, the company is one of the earliest domestic companies to develop GS series CIS products, and is also one of the only three companies in the world with large-scale mass production capacity of global shutter CIS. The company's unique BSI products, combined with 3D stacking and other technologies, already have single-frame HDR functions and high shutter efficiency and photosensitive performance; in the smartphone field, the core technology used by the company on the security side can be applied to smart phones field. The company's customers include mainstream mobile phone brand customers such as Samsung, Xiaomi, Lenovo, and Honor, and the high-end flagship 50 megapixel series products have also begun to cooperate with relevant brand manufacturers. In the field of automotive electronics, the company has established a product development process system that meets the highest level of functional safety “ASIL D”, becoming one of the few domestic manufacturers that can provide automotive-grade CIS solutions, and has developed 360-degree panoramic images, driving recorders, in-flight monitoring, etc., and various in-vehicle CIS products, such as BYD, Hikone, GAC, and Lantu, etc. Partnerships.

Investment advice: We expect the company's net profit from the mother in 2023/2024/2025 to be 0.49/2.42/489 million yuan, corresponding to PE 446/90/45 times. Considering the company's leading position in the security CIS field and the positive progress it has made in expanding the fields of automotive electronics and consumer electronics, the company was given a “buy” rating.

Risk warning: risk of macroeconomic recovery falling short of expectations; risk of technological iteration; risk of increased competition