Deeply involved in the field of integrated circuits. The products cover the two major fields of digital and analog integrated circuits. The company has been deeply involved in the field of integrated circuits for more than 20 years. It is one of the few domestic enterprises that have undertaken major national science and technology projects in the field of digital circuits and analog circuits at the same time. As a national “909” engineering integrated circuit design company and one of the first certified integrated circuit design enterprises in the country, the company focuses on the R&D, design, testing and sales of special integrated circuits, providing overall solutions for signal processing and control systems as the direction of industry development. Its main products cover the two major fields of special digital and analog integrated circuits.

Main business revenue continues to grow, and profitability is strong

Driven by the trend of chip localization, the company quickly grasped market opportunities with deep R&D accumulation, leading product advantages, and excellent customer service capabilities, and achieved rapid growth in overall performance.

From 2018 to 2023, the company's revenue grew from 0.116 billion yuan to 0.926 billion yuan, with a CAGR of 51.51%; net profit to mother increased from 0.004 billion yuan to 0.311 billion yuan, with a CAGR of 136.55%. The company's overall gross margin has remained high in recent years. Since 2019, the overall gross margin level has exceeded 70%.

In 2023, the company maintained a high profit level. The comprehensive gross margin was 76.15%, +0.02pct year on year. The main reason was the increase in revenue from the company's new analog circuit products and the gross margin was high, 79.82%, or +3.05 pct year on year, offsetting the negative factors of the decline in revenue from other products and the decline in gross margin.

Digital, analog, and electric core technology advantages, and emerging domestic fields drive market growth digital integrated circuits: in the FPGA and CPLD fields, the company is in a leading position in the country in terms of product technology. In the FPGA field, the company has continuously participated in the research and development of major science and technology projects in the “11th Five-Year Plan” to “13th Five-Year Plan” countries representing the most advanced technology direction in the FPGA field. The company, along with industry companies such as Ziguang Guowei and Fudan Microelectronics, is in a leading position in the domestic special field in terms of product technology. Currently, they have successfully developed 70 million gate-level high-performance FPGA products. The most advanced mass-produced product series are all similar in terms of the number of logic units, and are leading the domestic market in terms of product technology and sales scale.

Analog integrated circuits: The analog chip market is still dominated by overseas companies, and there is plenty of room for domestic replacement. The analog chip industry started in developed countries such as Europe and America. Years of development have given overseas manufacturers great advantages in terms of technology accumulation, customer resources, and brand effects. Currently, the analog chip market is still dominated by overseas companies. In terms of sales, Texas Instruments, Adderall, Scarson, and Infineon have high market shares, and there is still plenty of room to replace domestic products. In 2017-2022, China's analog chip market grew from 214.01 billion yuan to 295.61 billion yuan, with a compound growth rate of about 6.67%.

Profit prediction and rating: In terms of integrated circuits, the company is in a leading position in the country in terms of product technology in the FPGA and CPLD fields. The simulation market is still dominated by overseas companies, and there is plenty of room for domestic alternatives. Under this assumption, the company's net profit for 2024-2026 was 0.373/0.471/0.635 billion yuan, and the corresponding EPS was 0.59 yuan/share, 0.74 yuan/share, and 1.00 yuan/share, respectively. The first coverage gives a “buy” rating.

Risk warning: Risk of gaps in technology, products, and markets with leading companies in the same industry; risk of insufficient technology iteration and new product development capabilities; risk of the company's technology development and industrialization not meeting expectations; risk of screening yield fluctuations; risk of accounts receivable and bill receivable recovery; risk of inventory turnover and price decline.