Key points of investment
Incident: On February 29, 2024, Jingjiawei announced the “Double Improvement of Quality and Return” action plan.
Continue to focus on the development of GPU technology and continuously expand its advantages in the GPU field: The company has been deeply involved in GPU technology research and development for more than ten years, and has successfully developed a series of domestic GPUs with independent intellectual property rights represented by the JM5 series, JM7 series, and JM9 series. The application scenarios have expanded from the field of graphics rendering to some computing fields, and have been widely used in the dedicated and general markets. The company's GPU is in a leading position in the Party, Government, and Xinchuang market. In the future, the company will target the application direction of GPUs in the field of artificial intelligence and continue to develop and launch new products with the aim of entering the Xinchuang and AI markets in the industry.
Making more efforts, pointing the finger at the AI chip market: 1) The company will establish the R&D organization structure of the “BU+ Common Research Institute” and build various R&D platforms and key laboratories. 2) R&D investment continues to increase.
In 2022, the company's R&D revenue accounted for 27.33%. In 2023, the company set up a subsidiary in Wuxi to introduce talents and strengthen the overall solution capabilities for the cluster computing power industry in the GPU direction.
3) Strengthen technical cooperation. In 2023, the company and Peking University's Changsha Institute of Computing and Digital Economics jointly set up an “Advanced Computing” joint laboratory to study the design of next-generation domestic GPU computing architectures. 4) The company and professional institutions have jointly set up an industrial fund and have cultivated more than ten high-quality projects.
Localizing AI computing power is trending, and Jing Jia Wei is ready to go: On February 19, the Central State-owned Enterprises and State Council's State-owned Assets Administration Commission meeting emphasized that central enterprises should place the development of artificial intelligence in overall planning and accelerate the layout and development of the intelligent industry. Computing power is the foundation of AI. In the context of stricter overseas sanctions, localization of computing power is particularly urgent. Under the leadership of central and state-owned enterprises, the proportion of domestic computing power will get higher and higher. Jingjiawei is the earliest domestic company to develop GPUs. The technology is completely independently developed, and it has a deep technical accumulation. The company released the “Double Improvement of Quality and Return” action plan, making more efforts to increase AI chip research and development, which is expected to fully benefit from the wave of AI chip localization.
Profit prediction and investment rating: Jingjiawei is a leading domestic graphics GPU, and its products have a high market share in the fields of special purpose and party, government, and credit innovation. In the future, the company will focus on AI chip research and development. As the localization of AI chips accelerates, the company's chip business is expected to accelerate development. However, due to the Party, Government, and Xinchuang's bidding schedule falling short of expectations and the pace of procurement in the special sector slowing down, we lowered the company's 2023-2025 net profit forecast to 0.60 (-3.48) /3.20 (-2.38) /4.65 (-2.84) billion yuan. Maintain a “buy” rating.
Risk warning: Technology research and development falls short of expectations; ecological construction falls short of expectations; policy progress falls short of expectations.