GigaYi Innovation is a leading domestic niche storage and MCU company, with a series of products such as Nor Flash, SLC NAND Flash, DRAM, and MCU. In 2023, the company's main business strategy is to increase sales and expand market share, seize market share, continue to improve the product line, upgrade the product structure, and support steady business development.
The company has published the 2023 Annual Report and the 2024 Quarterly Report. In 2023, the company achieved revenue of 5.761 billion yuan, a year-on-year decrease of 29.41%; net profit to mother was 161 million yuan, a year-on-year decrease of 92.15%. In the first quarter of 2024, the company achieved operating income of 1,627 billion yuan, up 21.32% year on year, up 19.10% month on month; net profit to mother was 205 million yuan, up 36.45% year on year, turning loss into profit from month to month.
The niche storage market is beginning to pick up, with AI servers, PCs and mobile phones driving industry demand: According to TrendForce Jibang Consulting's research, benefiting from the recovery in stocking momentum and the benefits of production control from the three major original manufacturers, contract prices for mainstream products rose, driving the global DRAM industry's revenue to US$17.46 billion in the fourth quarter of 2023, with a quarterly increase of 29.6%. Benefiting from original production cuts, bulk storage price increases, and the original manufacturer's shift to HBM and DDR5 production capacity, niche DRAM prices began to rebound continuously after bottoming out in 23Q3, leading the niche storage market. SLC NandFlash and NOR Flash prices have also bottomed out and rebounded.
Generative AI has brought many opportunities to the current electronics industry. The application of NOR flash in AI servers has increased dramatically. For example, the increase in GPUs will drive the growth of 40-60 NOR Flash devices, and peripheral devices such as compatible network cards will also use NOR Flash storage. In addition, edge-side AI applications such as AI PCs and AI phones also require additional NOR Flash resources, which is expected to drive up demand in the NOR Flash market.
With the goal of expanding market share, the consumer, industrial, and automotive markets are fully covered: in the storage market, the company's NOR Flash products reached a new high in 2023, reaching 2,533 billion units, achieving 16.15% growth. The company continues to maintain its advantages in the consumer market, especially in the middle and high-end consumer markets, while actively expanding application fields in the industrial, Netcom, automotive and other markets; in terms of SLCNAND Flash products, after years of development, the company's products have achieved full product coverage in the fields of consumer electronics, industry, automotive electronics, etc. Shipments achieved a significant year-on-year increase in 2023; in terms of DRAM, the company already has multiple product models in the DDR3 and DDR4 product lines. The market expansion effect in 2023 is obvious, and the total number of customers sold is steadily increasing.
On the MCU side, demand remained low in 2023, industry competition intensified, and product prices continued to drop. In terms of revenue levels, MCU revenue declined sharply in the first half of the year, and the decline gradually narrowed in the second half of the year, showing signs of stabilization in the fourth quarter compared to the third quarter. By the end of 2023, the company had shipped more than 1.5 billion MCU products.
The company continues to improve R&D capabilities around PMU products with an MCU layout, and actively explore consumer, industrial, and Netcom markets. As an important application scenario for the future, the company continues to explore the automotive market, fully moving from rear-mounted applications to automotive-grade front-end applications. The company cooperated closely with mainstream domestic and foreign car manufacturers and Tier 1 suppliers, and achieved a good year-on-year increase in shipment volume in 2023. Cumulative shipments of automotive-grade flash memory products have exceeded 100 million units. Vehicle MCU products have now been successfully developed in cooperation with leading domestic Tier 1 platforms, such as ATEC body control zones and Baolong Technology tire pressure monitoring systems, and have also cooperated with a number of leading international companies.
In terms of sensor products, the mobile phone market was the first segment to pick up in 2023. The company's sensor products synchronized with the market and achieved the same relatively good growth in shipments, and the market share increased in 2023.
Profit forecast, valuation and rating: Affected by the industry cycle, we lowered the company's net profit to mother in 2024 and 2025 to $1,091 billion (-40.4%) and $1,616 billion (-33.5%), and added a 2026 performance forecast. We expect the company's revenue for 2024-2026 to be 71.94, 91.54, and 10.776 billion yuan, respectively, and net profit to mother of 10.91, 16.16, and 2,099 billion yuan, respectively. The PE corresponding to the current market value is 48, 32, and 25 times.
The company's performance in 2023 declined due to the impact of the industry cycle, but in the first quarter of 2024, the company's performance picked up significantly, the market share of the company's products increased, competitiveness was further enhanced, and we maintained the company's “buy” rating.
Risk warning: Industry demand falls short of expectations; self-developed DRAM marketing falls short of expectations.