Minxin Co., Ltd.: A leading enterprise in the domestic MEMS industry. Minxin Co., Ltd. is a semiconductor chip design company that mainly develops and sells MEMS sensors. Currently, the main product lines include MEMS microphones, MEMS pressure sensors, and MEMS inertial sensors. As the only listed company in China that has mastered multi-category MEMS chip design and manufacturing process capabilities, the company is committed to becoming an industry-leading MEMS chip platform enterprise. In the first three quarters of 2023, the company achieved revenue of 259 million yuan, a year-on-year increase of 18.82%; corresponding to the 3Q23 quarter, the company achieved revenue of 103 million yuan, an increase of 37.28% year-on-year, for 2 consecutive quarters of month-on-month growth. Mainly due to the recovery in market demand, the company's product sales increased a lot. In terms of revenue structure, in the first half of 2023, the company achieved revenue of 1.07/0.32 billion yuan for MEMS acoustic sensors, MEMS pressure sensors, and MEMS inertial sensors respectively, accounting for 68.69%, 20.61% and 7.65% of revenue, respectively.

MEMS industry: Abundant downstream applications, broad domestic replacement space. The downstream market for MEMS devices is diversified and the market space is broad. There are differences in index parameters such as product size, signal-to-noise ratio, and sensitivity of products of different specifications and models, and the downstream markets of application are not the same. MEMS products are widely used in various fields such as consumer electronics, automobiles, industry, medical care, and communications. Among them, consumer electronics and automobiles are currently the main application fields of MEMS. According to Yole's data forecast, the global MEMS device market is expected to grow from US$14.5 billion in 2022 to US$20 billion in 2028. Among them, MEMS radio frequency devices, IMUs (inertial measurement units), MEMS pressure sensors, accelerometers, MEMS microphones, etc. are the main products in the MEMS industry. MEMS technology barriers are high, and the market has long been dominated by a few overseas giants such as Bosch, Broadcom, Qualcomm, and ST, and there is broad scope for domestic alternatives.

Focus on R&D investment and industrial chain layout, and open up new markets with new products. The company adheres to the localization of the entire MEMS sensor production system, independently develops and designs MEMS sensor chips, builds its own packaging test production line, and leverages its cost advantage over competitors by introducing MEMS production and processing technology to domestic wafer manufacturers. Through years of accumulation and continuous investment in R&D and innovation, the company has now formed 12 core technologies, covering all technical aspects of chip design, package testing and production processes. The company continues to reduce the size of MEMS microphone chips for consumer electronics, and the 2023 H1 bone conduction microphone continues to be upgraded with brand customers; starting in 2022, it has been developing next-generation pressure-sensitive sensors based on new technologies and structures such as printed electronics, compression, and piezoresistance to meet different requirements in industrial control, automobiles, etc.

Investment suggestion: The company's revenue for 23-25 is estimated to be 3.74/5.04/668 billion yuan, respectively, and net profit to mother is -0.92/-0.20/0.55 billion yuan respectively, corresponding to the current market value PS, respectively. The company is one of the few domestic targets with independent R&D capabilities and core technology in MEMS sensor chip design, manufacturing, packaging and testing. It is expected that it will maintain rapid revenue growth for the next three years, and has strong performance distortion ability and growth elasticity as the industry recovers and product structure improves, and is comparable to the benchmark The company is currently still undervalued, covered for the first time, and given a “recommended” rating.

Risk warning: risk of downstream demand falling short of expectations; risk of increased market competition; risk of new products and new market development falling short of expectations.