Matters:
On March 12, 2024, Jingjiawei issued a voluntary disclosure announcement stating that it has successfully developed the Jinghong series of high-performance intelligent computing modules and complete machine products for AI training, AI inference, and scientific computing applications.
Commentary:
Domestic GPU leader, focusing on the development of underlying technology. Since its establishment, the company has been deeply involved in the field of GPU research and development. After more than ten years of technology accumulation, it has become a leading domestic GPU design enterprise with advantages such as technical advantages, leading full life cycle management level, and large-scale application scenarios. In the field of GPU R&D, the company focuses on underlying technology development, and fully implements independent research and development in architecture design, algorithm models, principle verification, hardware implementation, and driver development. At present, the company has successfully developed a series of domestic GPU products with independent intellectual property rights, represented by the JM5 series, JM7 series, and JM9 series. The application scenarios have gradually expanded from the field of graphics rendering to some computing fields, and have been widely used in the dedicated and general markets. The gross margin of its products has performed well, and has remained above 60% in recent years.
Jinghong series products are launched, and the field of product reach is expected to expand. The new Jinghong series of products is a high-performance intelligent computing module and complete machine product for application fields such as AI training, AI reasoning, and scientific computing. It supports mixed precision computation such as INT8, FP16, FP32, FP64, etc., and supports new multi-card interconnection technology to expand computing power, adapts to mainstream domestic and foreign CPU, operating systems and server manufacturers, and can support current mainstream computing ecosystems, deep learning frameworks and algorithm model libraries, greatly shortening the user adaptation verification cycle. The Jinghong series will enrich the company's high-performance intelligent computing product line for the computing field, broaden the application fields of the company's products, and enhance the accessible market space.
Domestic demand for AI intelligent computing is strong, which is expected to stimulate the company's product launch. On February 19, 2024, the State Assets Administration Commission held a special promotion conference on artificial intelligence for central enterprises to solidly promote the transformation of the AI enabled industry. The conference focused on the foundation for the development of the artificial intelligence industry and deployed two core tasks: 1) speeding up the construction of a number of intelligent computing power centers; 2) carrying out AI+ special actions to strengthen demand traction and accelerate the empowerment of key industries. Build a batch of high-quality multi-modal industrial data sets, and create large-scale models from infrastructure, algorithm tools, and intelligent platforms to solutions to empower the industrial ecosystem. According to IDC's 2022 forecast, the scale of China's intelligent computing power will continue to increase. It is expected that by 2026, the scale of China's intelligent computing power will reach 1271.4EFLOPS, with a compound annual growth rate of 52.3%.
Taking advantage of the trend of localization of computing power, its high-performance intelligent computing products are expected to fully benefit and drive the company's growth.
Investment advice: The company's product sales in '23 fell short of expectations, but the launch of the new intelligent computing power product shows the company's determination to lay out the AI intelligent computing field. The company's business is expected to benefit from the growth in the scale of domestic intelligent computing power. Based on the company's latest performance forecast and new product launch events, we adjusted the company's profit forecast. The company's revenue for 23-25 is estimated to be 7.45/12.37/1,986 billion yuan (previous value was 1,405/19.32/2,585 billion yuan), with a corresponding growth rate of -35.40%/65.94%/60.53%; the corresponding EPS was 0.12/0.53/0.82 yuan, respectively. In terms of valuation, considering that the company is currently in a period of rapid expansion to promote commercialization of new products, PS is used for valuation. We selected Cambrian, a leading domestic AI chip manufacturer, and Longxin Zhongke, a leading CPU manufacturer, as comparable companies. We gave 40xPS in 2024, corresponding to a market value of 49.48 billion yuan and a target price of 10.827 yuan, maintaining a “strong push” rating.
Risk warning: Product marketing falls short of expectations, new products have technical risks.