We are deeply involved in power and battery management chips, and the product matrix is rapidly expanding. Established in 2015, the company is a leading analog and embedded chip design enterprise in China, focusing on power and battery management chips, which can be used in mobile phones, notebooks/tablets, industrial and automotive fields. It is one of the few companies that can directly compete with major international manufacturers and achieve domestic replacement of high-end products. Its main customers include mobile phone manufacturers such as OVM and transmission, car companies such as Volvo and Hyundai, and industrial manufacturers such as TTI. In 2021, the company's charge pump charge management chip ranked first in the world (accounting for 24%), and the step-down voltage charging management chip ranked second in the world and number one in the country. On the financial side, the 2023 and 24Q1 companies achieved revenue of 1,78/60 billion yuan respectively, an increase of 37%/111% year on year, and net profit to mother of 26/10 million yuan, an increase of 6%/225% year on year.
Simulate the long slopes and heavy snow on the racetrack, and the fast charging terminal quickly releases volume. According to Statista data, the global analog chip market reached US$94.6 billion in 2022 and is expected to rise to US$121.1 billion in 2027, with a CAGR of 5%. The top 10 market share in 2021 were all overseas manufacturers. China's analog chip self-sufficiency rate was only 12%, and there is plenty of room for domestic replacement. As the functions of terminal products are diversified and the requirements for charging speed continue to increase, the penetration rate of high-power charging in the mobile phone adapter, mobile power supply, portable energy storage, and power tool markets is gradually increasing, and charge pump charging management chips will expand as a key for high-power fast charging.
Based on fast charging for mobile phones, we are expanding our layout in many fields. The company's products can be roughly divided into six categories: charging management ICs, BMS, DC-DC, AC-DC, charging protocol chips, and other PMICs. They have achieved product coverage from the power supply end to the device end, and can meet the charging requirements of 22.5W to 300W. Among them, charge pump chips with 2:1 and 4:2 architectures have surpassed international manufacturers in some technical indicators. In addition, the company is seizing opportunities for automotive electronics development, starting with in-vehicle charging, and continuously expanding the vehicle product layout. It has now raised funds to develop automotive-grade BMS chips, high-performance car charger chips, and DC-DC chips, which are incremental businesses contributing greatly to future performance.
Profit forecast and investment advice: We expect the company to achieve operating income of $24.5/32.4/4.12 billion in 2024/2025/2026, up 37%/32%/27% year on year; net profit to mother of 4.1/50/ 650 million yuan, up 57%/23%/29% year on year, corresponding to 2024/2025/2026 PE of 33/27/21X respectively. Considering that the company's short to medium term performance will benefit from the increase in mobile phone fast charging penetration rate+horizontal expansion of the product line, the medium to long term will further benefit from the gradual expansion of industrial control, automobile and other fields. It was covered for the first time, giving it a “highly recommended” rating.
Risk warning: Downstream demand falls short of expectations; progress in new product development falls short of expectations; increased competition puts pressure on gross margins.