Revenue for the first quarter increased 10.98% year over year, and net profit to mother increased 47.53% year over year. The company released its 2025 quarterly report, achieving revenue of 1.53 billion yuan (YoY +10.98%, QoQ +18.9%), a record high for the same period; achieved net profit of 0.188 billion yuan (YoY +47.53%, QoQ -17.5%), after deducting non-attributable net profit of 0.17 billion yuan (YoY +44.04%, QoQ -11.9%). The Q1 consolidated gross margin was 36.23%, up 2.01 percentage points year over year. The company expects further year-on-year growth in operating results for the second quarter and full year of 2025.
End-side AI chips are growing rapidly, and the proportion of Wi-Fi 6 products has increased dramatically. Benefiting from rapid growth in smart home market demand and increased penetration rate of end-side AI technology in the first quarter, the company's smart home chip sales increased by more than 50% year-on-year, and shipments exceeded 10 million units in a single quarter. The company's various product lines already carry more than 15 commercial chips with intelligent end-side computing power units developed by the company itself. Shipments of chips carrying self-developed smart end side computing power units reached nearly 4 million in the first quarter, which is close to 50% of the total number of similar chips shipped in 2024. In terms of Wi-Fi chips, W-series chip shipments increased by more than 35% year-on-year in the first quarter. Among them, Wi-Fi6 2*2 chip shipments already accounted for nearly 25% of the W product line (1Q24 accounts for about 1.5%), and it is expected that subsequent Wi-Fi 6 sales and share will increase significantly.
The target shipment volume of the C&W series is 50% CAGR, and 6nm sales are expected to reach 10 million units in 25 years. The cumulative shipment volume of wireless connectivity chips and vision system chips in 25-28 of the company's 2025 stock incentive plan is higher than 6628/102.4/156.5/237.6 million units, reflecting the importance the company attaches to wireless connectivity chips and vision system chips. In terms of product line segmentation, the 6nm S905X5 series has received orders from many top international operators. The sales volume is expected to reach more than 10 million units in 25 years. The 8K chip S928X has all the shares of domestic operators, and is expected to be shipped on a scale of over one million. The sales volume of the T series increased by more than 30% year on year in 24, and has completed full coverage of the international mainstream TV ecosystem. The annual sales volume of the W series reached nearly 14 million units, the cumulative sales volume exceeded 30 million units, and Wi-Fi 6 2*2 sold more than 1.5 million units throughout the year. Wi-Fi APs have successfully completed streaming. In terms of the A series, more than 8 million units were shipped in 24 years, and the A311D2 sold more than 1 million units. The application of somatosensory sports games on TVs will drive additional sales of more than one million in 25 years.
Investment advice: Maintain an “better than the market” rating. We are optimistic about the company's competitiveness and leading edge in the smart SoC field. The company's 6nm flagship chip has been mass-produced, and the W-series WiFi6 and A-series AI end-side chips are expected to help the company's performance grow steadily over 25 years. We expect the company's 2025-2027 revenue to be 7.391/8.936/10.725 billion yuan (25-26 years ago worth 7.873/9.462 billion yuan) and net profit to mother of 1.035/1.331/1.755 billion yuan (value 1.052/1.319 billion yuan 25-26 years ago). The PE corresponding to the current stock price is 29/23/17 times, respectively, maintaining the “superior to the market” rating.
Risk warning: industry competition increases risk; risk of rising raw material procurement prices; risk of product development progress falling short of expectations; risk of exchange rate fluctuations, etc.
