Focus on RF front-end chips and launch reconfigurable RF front-end solutions: Huizhiwei is a chip design company that provides RF front-end for smart phones, the Internet of Things, etc., and its main business is R&D, design and sales of RF front-end chips and modules. The company has a full set of RF front-end chip design capabilities and integrated module development capabilities. The technical system is centered on power amplifier (PA) design capabilities, and has the design capabilities of RF devices such as low noise amplifiers (LNA), radio frequency switches (Switches), and integrated passive device filters (IPD filters). The communication band requirements covered by the product range include 2G, 3G, 4G, and the 5G re-cultivation band below 3 GHz, and the new 5G band from 3 GHz to 6 GHz. Since its establishment in 2011, the company has been focusing on the field of RF front-end chips. Based on years of technology accumulation, the company proposed a reconfigurable RF front-end platform and adopted a reconfigurable RF front-end technology route based on the two material systems of “insulating silicon (SOI) +gallium arsenide (GaAs)”. After insulating silicon became the mainstream material in devices such as low noise amplifiers and radio frequency switches, the company introduced insulating silicon into the field of power amplifiers and successfully commercialized, mastered the implementation path of intelligent regulation of high-frequency analog signals, formed an autonomous reconfigurable RF front-end architecture, and expanded it to fields such as LNA and IPD filters. The company's reconfigurable hardware architecture based on “insulated silic+gallium arsenide” materials reduces the area used by gallium arsenide wafers. The unit cost of mature insulated silicon wafers is relatively low, which is conducive to optimizing overall wafer costs. The company's revenue mainly consists of 4G modules and 5G modules. Under the trend of localizing the RF front-end, as the company continues to accelerate the speed of customer introduction and increase in new product development capabilities, the company's revenue scale has risen rapidly. In 2020, the company's 5G new band fully integrated transmission module products entered the leading customer supply system, driving the company's 5G module revenue to rise rapidly.

RF modules continue to be abundant, and L-pamid modules are mass-produced on a small scale: the company has a full set of RF front-end chip design capabilities and integrated module R&D capabilities. The technical system is centered on power amplifier (PA) design capabilities, and has design capabilities for RF devices such as low noise amplifiers (LNA), radio frequency switches (Switch), and integrated passive device filters (IPD filters). The communication band requirements covered by the product range include 2G, 3G, 4G, 5G and new 5G frequencies below 3GHz to 6GHz Sections etc. The company's 5G new band series products mainly include L-PamIF transmission modules and L-FEM reception modules. This series of products supports the 3GHz to 6GHz band range. Higher frequencies are conducive to supporting larger communication bandwidths, thus obtaining faster communication speeds. The company's 5G heavy cultivation band products are mainly 5G MMMB PA modules and L-pamid modules, which support 5G NR, 4G LTE, and 3G communication bands below 3 GHz. Since its establishment, the company has focused on developing 4G multi-frequency multi-mode power amplifier modules (MMMB PAM), successfully launched 4G LTE reconfigurable RF front-end products in 2015 to achieve commercial use of reconfigurable power amplifier modules, and launched a new generation of MMMB PA modules in 2017. This product supports 4G LTE full band. Through reconfigurable technology, it can achieve channel multiplexing in multiple modes and bands of TD-SCDMA/WCDMA/CDMA2000/TD-LTE/LTE-FDD. High degree, superior performance. According to the investor survey minutes released by the company on October 31, 2023, the company's 5G low band and medium to high band L-pamid modules have now been mass-produced and shipped on a small scale and are in the customer promotion stage. Regarding the entire domestic RF chip industry, we believe that along with the development of the domestic industrial chain, from a technical point of view, the domestic RF industry chain has successively had companies with mass production capacity for large L-pamid modules. The overall RF industry chain has completed the development stage from 0 to 1, and has begun to gradually move towards more high-end product forms. At the same time, due to the slump in downstream demand from 2022 until now, the valuation of listed companies related to the industrial chain is under pressure, and intense competition among domestic manufacturers on some tracks has also greatly reduced the profitability of related manufacturers. This has led to a decrease in the popularity of investment in RF tracks in the first-tier equity market, and the supply pattern of the entire RF industry chain is expected to continue to be optimized in the future.

Investment suggestions: We predict that from 2023 to 2025, the company will achieve revenue of 604 million yuan, 1,102 billion yuan, and 1,395 million yuan respectively, and achieve net profit attributable to shareholders of listed companies of -236 million yuan, -0.67 million yuan, and 121 million yuan respectively. Considering that the company is not yet profitable, we use the PS valuation method for valuation. The corresponding PS is 15.40 times, 8.44 times, and 6.67 times respectively. Considering that the company's RF module continues to break through in the future and has broad room for growth in the future, coverage for the first time, we give a proposal to increase holdings -B 。

Risk warning: Downstream demand is sluggish, competition among peers intensifies, new product development and introduction falls short of expectations