Key points of investment

High-performance MEMS inertial sensor leader, breaking overseas monopolies. The company's main products are high-performance MEMS inertial sensors, including MEMS gyroscopes and MEMS accelerometers. Revenue grew rapidly in 2019-2023, reaching 0.8, 1.1, 1.7, 2.3, and 320 million yuan, respectively. According to Yole statistics, the global high-performance MEMS inertial sensor market size in 2021 was about 71 million US dollars (including MEMS inertial sensor systems), and the market share was concentrated in the hands of industry giants such as Honeywell, ADI, Northrop Grumman, and Litef, with CR3 accounting for a total share of more than 50%. The company has long been committed to independently developing high-performance MEMS inertial sensors. The core performance indicators have reached the international advanced level, and there is broad space for domestic replacement.

MEMS has a wide range of downstream applications, and the global market is expected to reach US$22.3 billion by 2027.

MEMS devices have been widely used in various fields such as consumer electronics, automobiles, medical care, industry, and communications. According to Yole's statistics and forecasts, the global MEMS industry market size will grow from US$13.6 billion in 2021 to US$22.3 billion in 2027, with a compound growth rate of 9.00% in 2021-2027. MEMS inertial sensors are the main product type in the MEMS industry, including accelerometers, gyroscopes, magnetometers, and inertial sensing combinations. The total market size of the four categories of products in 2021 was US$3.509 billion, accounting for 25.81%.

With a forward-looking layout of IMUs, autonomous driving and humanoid robots have broad prospects. An IMU usually contains three axial gyroscopes and three axial accelerometers to measure the angular velocity and acceleration of an object in three-dimensional space. In the field of autonomous driving, IMU can assist GPS navigation.

When the satellite signal is weak or lost, the IMU can measure acceleration and angular rate information in real time, and can still obtain highly accurate position information in a short period of time, and use trajectory estimation to achieve short-term navigation. The company's current research projects cover automotive-grade high-performance MEMS IMUs suitable for L3+ autonomous driving and automotive-grade functional safety 6-axis MEMS IMUs, and its share in the field of autonomous driving is expected to gradually increase in the future. In the field of humanoid robots, sensors play a significant role in the sensing layer and interaction layer. Various sensors on Tesla Optimus robots account for nearly 30% of the cost. The IMU can measure the angular velocity and acceleration of the robot in real time to help the robot maintain a stable posture and balance. It is expected that the IMU used in humanoid robots is close to the L3 level intelligent driving accuracy requirements, and the company is expected to expand the application field to humanoid robots.

Investment advice:

We expect the company's 2023-2025 net profit of 2.3/3.3/450 million yuan, covered for the first time, and given a “buy” rating.

Risk warning:

Technology iteration risk; new product development falls short of expectations; industry competition increases risk; product promotion falls short of expectations.