Chengdu Huawei: Little giant of special integrated circuits. The product spectrum continues to improve. The company focuses on integrated circuit research and development, design, testing and sales, to provide overall solutions for signal processing and control systems as the direction of industry development. The main products cover the two major fields of special digital and analog integrated circuits, which are widely used in special fields such as electronics, communications, control, and measurement. The company has obvious technical advantages. Driven by various factors, the acceleration of equipment construction for downstream customers, the increase in the localization rate of integrated circuits, and the improvement in the level of equipment informatization, it is expected to achieve long-term steady development. We expect the company's net profit to be 329/4.09/559 million yuan in 2023-2025. Using a combination of relative valuation and absolute valuation methods, we expect the company's overall fair value range for 6-12 months to be 91.18-9.669 billion yuan.
Digital integrated circuits: established players in logic chips, strong momentum for FPGA and MCU development. The company's digital integrated circuit business mainly includes products such as CPLD, FPGA, storage and MCU. The technology level is leading, and demand continues to grow. Among them, market demand for FPGAs is expected to continue to be high due to the characteristics of programmable, high flexibility, parallelism, and low latency. According to statistics from the Huajing Industry Research Institute, the global FPGA market is expected to grow to US$12.560 billion in 2025, with an average compound annual growth rate of about 16.4% from 2021 to 2025. The company's FPGA product technology is in a leading position in China and has maintained rapid growth in recent years; new MCU products have been launched one after another, and various models have entered the market introduction period, and the development prospects are good.
Analog integrated circuits: Digital-to-analog conversion chips have significant advantages. High-end products continue to break through. The company's analog integrated circuits mainly include data conversion chips, power management chips, and bus interface chips.
In terms of data conversion chips, the company has technical advantages. A variety of products have filled the domestic gap, continued to provide downstream customers with localized solutions in the high-end field, and achieved rapid growth in recent years. At present, there is still plenty of room for domestic replacement in the high-end analog chip field, and customer pursuit of high-performance products and domestic substitution trends are expected to help the company's analog chip business continue to grow rapidly.
The overall forward fair value range of 6-12 months after listing is 91.18-9.669 billion yuan combined with the PE relative valuation method and the FCFF absolute valuation method. We chose the intersection of the two as the valuation result. We expect the overall fair value range for the 6-12 months after listing to be 91.18-9.669 billion yuan, which corresponds to 32.45-34.38 times net profit deducted in 2022, and 33.77-35.81 times net profit after deducting non-return to mother. The average monthly static price-earnings ratio of the industry is 29.39 times.
Risk warning: the risk that profit forecasting assumptions fall short of expectations; the risk that the price-earnings ratio level is higher than the average price-earnings ratio level of comparable companies; the risk that the price-earnings ratio level is higher than the overall price-earnings ratio level of the industry; the risk of downstream demand and product sales price fluctuations; the risk of high customer concentration, insufficient technology iteration and new product development capabilities; the risk of falling accounts receivable and accounts receivable; risk of inventory turnover and price decline; risk of net cash flow from operating activities being negative; risk of peer competition.