A pioneer in MEMS acoustic sensors in China, developed vertically and horizontally to build a platform-based enterprise. The company was founded in 2007. Li Gang, Hu Wei, and Mei Jiaxin are the founders of the company, all with rich accumulation in the MEMS industry. The company adheres to the strategy of vertical and horizontal development. From a vertical perspective, the company moved from fabless to fablite mode of operation, and established Desbey in 2019 to establish a special packaging production line, and participated in MEMS wafer production capacity in Suzhou Industrial Park in 2021, providing favorable conditions for the company's R&D and pilot testing; from a horizontal perspective, the company reached the third position in global shipments of silicon microphone chips in 2020. In addition to consolidating the competitive advantage of acoustic sensors, the company has sensors such as pressure, inertia, and differential pressure, etc., for downstream fields with a high base or high potential for growth Develop related products. In 2022, the company's acoustic sensors, pressure sensors, inertial sensors and other business revenue accounted for 79.28%, 14.01%, 5.81%, and 0.91%, respectively.
Sensors in automobiles are widely used, and there is broad scope for domestic replacement. The company is targeting the automobile market and is expected to achieve expansion. According to Yole data, in 2020, MEMS pressure sensors occupied 15% of the global MEMS industry's market space, about 1,764 billion US dollars, and its largest downstream application market was 683 million US dollars, accounting for 42%. Along with the steady increase in automobile sales and the increase in bicycle sensor usage brought about by automobile intelligence, the compound annual growth rate for 2020-2026 is expected to be 5.43%. In 2020, the MEMS pressure sensor market is still dominated by foreign manufacturers, and there is plenty of room for domestic replacement. In 2022, the company completed product development and verification based on MEMS, oil-filled medium isolation, ceramic capacitors, and glass microfusion technology routes, and received orders from front-loading customers in projects such as braking systems and smart seats. Furthermore, the company's pressure sensors have achieved a breakthrough in the field of wearable watches, and are equipped with flagship models from leading domestic manufacturers. Sales volume is expected to increase with terminal product volume in the future.
Acoustic sensor sales are leading the industry, strengthening the TWS market layout, and consolidating its leading edge. In 2022, the company's acoustic sensor sales volume reached 350 million pieces, ranking first in the industry. According to Yole data, acoustic sensors accounted for 12% of the global MEMS market share in 2020, about $1.38 billion. Acoustic sensors are mainly used in downstream markets such as mobile phones, smart audio, and TWS headsets. Among them, the TWS headphone market has high potential for development. According to Yole data, the compound annual growth rate for 2020-2026 is expected to be 28%. As the noise reduction technology of TWS headsets continues to be upgraded, from single mic to dual mic has become mainstream, demand for MEMS microphones is also increasing. At the same time, the introduction of bone conduction technology has also brought new market opportunities for acoustic sensors. The company continues to update its acoustic sensor products, target the development of the TWS market, promote the miniaturization of MEMS microphones and the application of bone conduction sensors, and consolidate its leading position in the field of acoustic sensors.
Profit forecast and investment rating: We expect the company's 2023-2025 operating income to be 377 million yuan, 507 million yuan, and 697 million yuan respectively, net profit of -95 million yuan, 14 million yuan, and 41 million yuan respectively; the market value on December 15, 2023 is 3.254 billion yuan, corresponding PS is 8.63x, 6.42x, and 4.67x. We believe that the company's pressure, acoustic, and differential pressure sensors are expected to increase. We are optimistic about the company's platform-based strategy for vertical development and maintain a “buy” rating.
Risk warning: risk of downstream application fields falling short of expectations; risk of increased industry competition; risk of macroeconomic downturn; risk of declining profit levels; risk of R&D failure: The estimate is for reference only, subject to reality.