Report summary:

As a leading FPGA chip company in China, Anlu Technology's products are widely used in industrial control, network communication, data centers, consumer electronics, etc. Since its establishment in 2011, the company has successively released a variety of heavyweight chips, including PHOENIX high-performance series, EAGLE high-efficiency series, ELF low-power series FPGA products, and SWIFT and DRAGON series multi-functional compatible FPSoC products. By 2023, it has shipped over 100 million units.

FPGAs are flexible and efficient, and AI can once again open up a broad application space. FPGAs have the advantage of flexible hardware programming, efficient development, high parallel processing efficiency, and determined low latency. The company has both software and hardware, and a complete range. It focuses on the development of next-generation FPSoC chips, integrating modules such as high-capacity storage, ARM and RISC-V cores, NPU, and DSP units, combining flexibility and compatibility. The launch of the company's flagship new product will take it to the next level and open up more application fields. The global FPGA market is about 10 billion US dollars. The growth rate of the Chinese market may exceed the global average, and AI applications will open up a broad market space.

Self-rise should be self-improvement, and high-end breakthroughs are widely used. The backlash from globalization is emerging, and there is an urgent need for semiconductors to be autonomous and controllable. The three major US players in the FPGA field occupy more than 80% of the market share and have a high degree of monopoly, and there is an urgent need for autonomous FPGA companies to rise. FPGAs focus on multi-dimensional technical indicators. Domestic companies have covered the middle and low end fields, and will welcome huge replacement space after high-end breakthroughs. Anlu Technology's products have excellent performance. Thanks to high-intensity research and development, the company's product performance is the best in China under the same process. It focuses on high-end processes and FPSoC products. It is expected to open up more market space and achieve a higher degree of domestic substitution in the future.

FPGAs empower thousands of industries and complement each other's ambitions. The characteristics of FPGAs complement and match the real-time processing, rapid changes, adjustable accuracy, and safety protection requirements of AI and aerospace, which will accelerate the implementation of AI applications and aerospace exploration and practice. The demand for high computing power brought about architectural innovation. Chiplet heterogeneous FPGA chips have perfect functions and powerful performance, high development efficiency and low cost, breaking the boundaries between FPGA and ASIC, and FPSoC gradually became mainstream.

First coverage, giving a “buy” rating. As a scarce general FPGA company in China, Anlu Technology has strong product competitiveness and huge room for growth. With the rise of AI and the low-altitude economy and the development of heterogeneous Chiplet technology, the FPGA chip market will usher in significant growth. It is expected that with the end of the industry's inventory removal cycle, the company's new products successfully enter the market one after another, and the company will resume rapid growth.

It is estimated that in 2024-2026, the company's revenue will be 1.017 billion, 1.493 billion yuan, and 1.936 billion yuan, giving an average PS valuation of 13 times that of comparable industry companies in 2024, with a corresponding target market value of 13.2 billion yuan.

Risk warning: Product technology development and market development progress falls short of expectations; downstream sector prosperity falls short of expectations; geographical risk; performance and valuation forecasts fall short of expectations.