Core views:
The AI PC boom combined the switching cycle is approaching, and the company's business is welcoming new growth. AIPC shifts the ecological focus of the PC industry from applications to people, significantly enhancing users' ecological voice. The mainstream switching cycle in the PC consumer market is 3-5 years. According to Gartner statistics, 2021 was the peak of the last round of PC switching. Currently, suppliers have made continuous progress in inventory digestion. Global PC shipments in Q4 showed an inflection point after eight consecutive quarterly declines, and Q4 increased 0.3% year-on-year.
With the dual support of AIPC and cyclical factors, the wave of switching is expected to accelerate this year and next. The company is in a leading position in the field of laptop modules and has been a leading supplier of notebook computers for a long time. We believe that the company's PC business is expected to achieve a new round of breakthroughs driven by AIPC and the wave of switching.
High computing power modules are an important carrier for edge computing, and the vertical integration of the company's industrial chain has significant advantages.
The AIGC outbreak has boosted demand for edge computing. Computing power modules, as carriers of edge computing, are expected to continue to benefit from the expansion of the edge computing market in the future. The company has many years of cooperation with leading overseas manufacturers. Most of its high-computing power intelligent modules are developed based on Qualcomm processors and MTK platform SOC solutions, so they have significant channel advantages on the edge side.
The company's automotive and FWA businesses have blossomed, and the performance continues to grow at a high rate. (1) Automotive: The company established a subsidiary, Guangtong Yuanchi, to focus on the domestic automotive front assembly market. Currently, it is the core supplier of BYD smart modules and is in the first tier in the domestic front-loading automotive module field. (2) On the FWA side: The world is in the 4-5G transition period, and overseas demand for 5G FWA devices is high.
The company has shipped in large quantities since 2021, and has shipped the most 5G modules in the 5G FWA field. The company's performance is expected to maintain high growth in this field as products and solutions are iterated in the future.
Profit forecasting and investment advice. We expect the company's 24-26 revenue to be 98.39/122.56/15.235 billion yuan, and the corresponding EPS is 0.98/1.17/1.44 yuan. We gave the company a 2024 PE 25x, with a reasonable value of 24.40 yuan per share, and gave it a “buy” rating.
Risk warning. Risk of overseas exports being restricted due to trade frictions; 5G downstream application progress falls short of expected risk; implementation of digital China policy falls short of expected risk; vehicle module penetration rate falls short of expectations