The Zhitong Finance App learned that Zhongtai Securities released a research report stating that it covered Black Sesame Intelligence (02533) for the first time and gave it an “increase in wealth” rating. Considering that the company has achieved mass production of chips such as the A1000 and has a number of designated partner models, mastered the first-mover advantage and launched the C1200, the first cross-domain computing chip in China, the chip business prospects are promising; and the company has a self-developed IP core, tool chain and other supporting ecosystem, which has advantages in terms of independence and breadth of adaptability, the company is currently in a period of rapid growth with high investment, which can give a certain valuation premium. The company's revenue for 2024-2026 is 0.569/1.027/1.824 billion yuan, respectively.

The main views of Zhongtai Securities are as follows:

Black Sesame Intelligence: Positioning as a smart driving chip supplier, excellent R&D team to build strong product strength.

1) Company positioning: Tier 2 chip supplier, providing automotive-grade computing SoC and SoC-based smart car solutions. 2) Product structure: The company has two automotive-grade SoC series - Huashan series and Wudang series to explore high computing power and new cross-domain opportunities. As of December 31, 2023, the total shipment volume of the flagship A1000 series SoC exceeded 152,000 pieces. 3) Equity structure: A single chapter has a cumulative controlling interest of 21.90%, and the prospects for multi-party investment cooperation are promising. 4) Talent structure: The founder and core management team have about 20 years of experience, have semiconductor+automotive composite genes, set up R&D and sales centers in many places, and a strong core R&D team. 5) Financial analysis: The company's revenue is growing rapidly, and gross margin growth is slowing down. This is due to the impact of SoC streaming costs and pricing strategies. Expense control has improved markedly. However, due to the company's growth period, it is still necessary to increase upfront investment such as R&D and sales channels, and the profit side is under pressure in the short term.

Industry: The division of labor in the industrial chain is more cost-effective, and cooperative R&D is expected to become mainstream.

1) Space: The wave of “intelligence” of automobiles has been repeated, technology costs have been reduced, consumer acceptance has increased, and related policy support. The NOA function ushered in the “first year” of mass production. The ADAsSoC market has expanded rapidly, and the load rate and value have risen sharply. 2) Trend: Opportunities and challenges coexist for SoC self-development. Facing the triple test of capital investment, repurchase cycle, and profit model, the division of labor in the industrial chain is more cost-effective, and cooperative R&D is expected to become mainstream. 3) Pattern: Overseas manufacturers lead the automotive SoC market, local chip makers speed up to catch up, black sesame cuts into various computing power SoCs, and has a comprehensive layout with high, medium and low price bands.

Core competitiveness: technical foundation, ecological empowerment, customer expansion.

Technology: 1) The product system is continuous, and the roadmap is continuously iteratively upgraded. The high-computing SoCA2000 was designed in 2022 and is expected to be mass-produced in 2026; the automotive-grade cross-domain computing SoC1200 was designed in 2022, and mass production is expected in 2025. 2) Self-developed core IP, taking the initiative. The company is one of the few autonomous driving SoC suppliers with self-developed vehicle-grade IP cores. 3) Master complete SoC design capabilities and have a large number of independent intellectual property rights.

Ecology: Platform-based design and tool chain configuration will become an important competitive advantage. The software ecosystem determines the value of the chip and helps customers “make good use of the chip”. 1) The Shanhai development tool chain is open and expandable, further shortening the algorithm and model development cycle for algorithm migration, quantification and deployment; 2) Hanhai-ASDSP middleware is adjusted as needed to meet the flexible needs of increasingly complex underlying hardware+sensors and upper layer applications.

Customers: The company's main customers are automotive OEMs and tier-1 suppliers. The number of customers is growing steadily. The customer base is 85 on December 31, 2023. 1) Vehicle side: After 2023, models equipped with the company's chips will be gradually mass-produced. Mass-produced models include Lynk & Co 08, Hechuang V09, Dongfeng E007, and the first pure electric SUV. 2) Roadside: It is one of the few suppliers in China that can simultaneously deliver vehicle and road dual-end sensing and vehicle-road collaboration solutions.

Risk warning: Market demand falls short of expectations; technology iteration and innovation; market competition intensifies; there is a risk that public data used in research reports may be delayed or not updated in a timely manner.