Introduction to this report:

Mobile phone subsidies speed up switching, which is more beneficial to mid-range models and new models, and RF flexibility is the greatest in segmentation.

With mobile phone subsidies+major customer support+the release of new brand models, Huizhiwei's performance will reverse at an accelerated pace.

Key points of investment:

Maintain the “Overweight” rating and maintain the target price at $18.24. As a core supplier in the RF field, the company benefits from mid-range mobile phone subsidies and a 25-year increase in new models, and cooperates with platform customers to bring new growth space. Driven by both factors, the company's performance bottomed out and rebounded, entering the fast track of growth. Maintaining 24-26 revenue of 0.558/1.295/2.292 billion yuan and maintaining 24-26 EPS of -0.85/0.01/0.48 yuan. Its L-pamid products have been mass-produced on a small scale and are expected to be introduced to brand customers at an accelerated pace. Considering that the semiconductor design industry's average valuation in '26 was 38 times PE, it will be given 38 times PE in 2026, maintaining a target price of 18.24 yuan.

Mobile phone subsidies bring potential switching space, and are expected to be the most profitable for mid-range models and new high-end models. According to the Minister of Industry and Information Technology's statement, small and medium-sized enterprises should vigorously develop smart products and promote the replacement of consumer terminals such as home appliances and mobile phones. Although the 23H2-24H1 phone has entered the stock replacement cycle, there are few actual switching people, and there is huge potential for switching. Mobile phone subsidies are expected to gradually be implemented in the near future. Considering that audiences below high-end phones are paying more attention to subsidies, it is expected that mobile phone subsidies will benefit more mid-range phones and new models.

RF is the most valuable part of a mobile phone other than SoC and storage, and benefits from subsidies the most flexible. In 23 years, the global RF front-end market space exceeded 20 billion US dollars (CIS is 14 billion US dollars), the RFFE ASP for mid-range phones was about 7 US dollars, and the RFFE ASP for high-end phones was about 11 US dollars. Looking at the mid-range and high-end phones, it is one of the most valuable segments in the mobile phone segment.

With mobile phone subsidies+major customer support+the release of new brand models, we believe Huizhiwei's performance will reverse at an accelerated pace. Huizhiwei is a leading supplier of radio frequencies. It mainly focuses on mid-range Android phones and benefits deeply from mobile phone subsidies. The year 25 is a key year for the company to introduce many major customers and launch new brand models. By deepening cooperation with major customers, L-Pamid products are expected to take the lead in mass production among brand customers. The first-mover advantage is obvious, and the company's performance will enter a fast track of growth.

Risk warning: The downstream recovery falls short of expectations; the competitive landscape of the industry deteriorates.