The inflection point of performance has arrived, and multiple business lines such as SPD, EEPROM, and voice coil motors go hand in hand. Juchen Co., Ltd. was established in 2009 and currently has product lines such as non-volatile memory chips, voice coil motor driver chips, smart card chips, and Nor Flash. In 2023, the company had the third largest share of the global EEPROM market. According to CCID Consulting's estimates, the company had the largest share of the smartphone camera EEPROM market in 2018. In recent years, the company has continued to focus on multiple product lines such as automotive NOR Flash, automotive-grade EEPROM, and voice coil motor drives, and is actively exploring growth space in new application markets such as automotive electronics outside of the traditional downstream mobile phone application market. In Q3 2023, the company achieved revenue of 185 million yuan, up 6.37% month-on-month, and achieved month-on-month revenue growth for two consecutive quarters. As demand in the downstream terminal application market gradually picked up and inventory removal came to an end, the company's performance is now at an inflection point.
Mobile EEPROM ushered in a recovery, and SPD and vehicle EEPROM opened up room for growth. According to Cidi consultant statistics, in 2018, Juchen Co., Ltd. was the world's number one supplier of smartphone camera EEPROM products, with a global market share of 42.72%. With module upgrades and the development of front cameras, the global demand for EEPROM for smartphone camera modules is still rising steadily, and with the recovery of the mobile phone market, the company's mobile phone EEPROM business is expected to improve.
DDR5 penetration is accelerating, and the company's SPD EEPROM products used in PC and server DDR5 memory modules are rapidly being released, and the requirements for higher bandwidth memory such as Intel AI PC CPU Meteor Lake will accelerate the iteration of DDR5 children and increase the demand for higher speed DDR5 memory.
Vehicle EEPROM is expected to fully benefit from the trend of intelligent vehicle upgrading. The company has become a supplier to many Tier 1 manufacturers at home and abroad. Shipments of automotive-grade EEPROM products grew rapidly in 2023, and currently the company's EEPROM products are rapidly advancing A0 standard certification, which is expected to continue to benefit from the increase in demand for EEPROM from new energy vehicles.
New products such as NOR Flash are closely developed to open up long-term growth prospects. In addition to the traditional EEPROM business, medium- and low-capacity NOR Flash products currently developed by the company have been delivered in batches to some application markets and customer groups, and will be used in smartphone-related products such as AMOLED mobile phone screens and TDDI touch chips, as well as in automotive electronics, wearables, and the Internet of Things. In the future, the company will further develop higher capacity NOR Flash products and improve the product layout in the NOR Flash field.
Investment advice: We expect the company's net profit to be 1.06/3.13/500 million yuan in 2023-2025, respectively, and the current price corresponding to 2023-2025 PE is 91/31/19 times, respectively. As a leading EEPROM company in mainland China, Juchen Co., Ltd. was the first to achieve large-scale mass production of SPD EEPROM products for DDR5 memory modules. The products are internationally competitive, and continue to expand high-end fields such as automobiles and industry, while expanding new products such as OIS and NOR Flash. The long-term growth curve is clear, covering the first time, and has given a “recommended” rating.
Risk warning: New product development and sales progress falls short of expectations; DDR5 penetration progress falls short of expectations; industry competition intensifies.