Technical capability The leading wireless communication platform chip design company in China: Aojie Technology was founded in 2015. The founder of the company, Mr. Dai Baojia, is the founder and former CEO of Radico, and has rich experience in the field of wireless communication chips. The company has mastered core technologies such as 2G/3G/4G/5G full-standard cellular baseband chips and multi-protocol non-cellular IoT chip design capabilities, ultra-large-scale digital-analog hybrid integrated circuits, RF chips, innovative baseband RF integration technology, and ultra-low power SoC chip design.

The advantages of IoT product iteration and integration are obvious. Redcap commercialization is gradual: the cellular module market continues to grow, and 4G/5G is expected to be the mainstream of shipments in the future. On the 4G side, the company's Cat.1 products have a cost advantage, and the company's integration advantages are obvious. With the current round of industry inventory removal, downstream demand recovery, and the company's new product launch, Cat.1 product revenue elasticity is expected to be released; as a leading Cat.4 domestic enterprise, the company is accelerating the domestic replacement process. The company enters the T-Box industry chain, the Internet of Vehicles market is developing or empowering the company. Cat.6/7 products have also been certified by many operators. In the future, with the introduction of the company's new product models, the Cat.6/7 business is expected to grow rapidly. On the 5G side, the company's 5G cellular baseband chips have begun to be shipped in batches, and there is plenty of room for long-term growth. Redcap products may be launched in 24-25, contributing to new growth momentum.

4G mobile phone baseband chips are expected to achieve a breakthrough “from 0 to 1”: the baseband chip barrier is high, the localization rate is low, R&D investment is huge, and independent third-party vendors have the advantage of large-scale mass production. Low-end phones are less likely to use self-developed chips, providing sufficient market space for independent third party baseband chips. Through the acquisition of Marvell, the company enhanced the technical strength of mobile phone baseband chips, and obtained strategic shares in companies such as Xiaomi and Wingtech.

The mass production version of the company's 4G smartphone chip (SoC) has completed streaming and may be mass-produced and shipped at 24H1.

Non-cellular IoT chip platform enterprises: The company's non-cellular IoT chip products cover WiFi, Bluetooth, LoRa, etc. Among them, the company's WiFi products are superior to competitors in many indicators, and a new generation of WiFi6 IoT chips is under development. The company's non-cellular products form a product matrix, and the high level of integration with cellular baseband products helps to achieve differentiated competition with competitors and broaden the corporate moat.

5G+AIoT has brought new market demand to the company's IP licensing and chip customization business: the company has provided chip customization services to many leading companies in the industry, and “5G+ AIoT” has brought new application scenarios and market requirements to the company's products; in terms of IP licensing, the ISP IP license developed by the company has covered leading domestic mobile phone manufacturers and well-known system manufacturers in other industries, and opened up the field of high-end display processor licensing.

Profit forecast, valuation and rating: We forecast that the company's revenue for 23-25 will be 2,699/35.05/4.579 billion yuan, respectively, and net profit to mother for 23-25 will be -4.97/-4.49/ -64 billion yuan, respectively. The PS valuation corresponding to the current market value is 9/7/5x, respectively. The company's 4G mobile phone baseband chips are expected to reach the 0-1 leap. 5G IoT baseband chips are starting to be launched, and there is broad room for growth. For the first time, coverage is given a “buy” rating.

Risk warning: risk of new product shipments falling short of expectations, risk of gross margin fluctuations, risk of downstream demand falling short of expectations, risk of international trade friction.