Key investment points
The product structure has been upgraded, and the proportion of high-pixel CIS has been further increased. In 2024, the company achieved revenue of 6.383 billion yuan, +35.90% year-on-year; realized net profit of 0.187 billion yuan, +287.20% year-on-year; realized net profit of 70.6566 million yuan without return to mother, +14.54% year-on-year. The global smartphone market bottomed out and rebounded in 2024. According to Sigmaintell (Sigmaintell) data, benefiting from continuous breakthroughs and innovation in AI technology in the mobile application field and strong demand in emerging markets, global smartphone shipments in 2024 were about 1.18 billion units, up about 6.8% year on year. After two consecutive years of negative growth, it achieved high single-digit growth for the first time. In this environment, the company's 2024 mobile CIS product shipments were the second highest in the world, accounting for about 23%. In 2024, the company's mobile CIS business achieved revenue of 3.598 billion yuan, +60.44% year-on-year, accounting for 56.39% of revenue. Among them, the revenue of 13 million pixel products and above exceeded 1.5 billion yuan, accounting for about 40% of the mobile CIS business. The proportion of high-pixel products further increased. Among them, 32 million pixel image sensor products were updated and iterated, and 50 million pixel image sensor products were mass-produced and shipped. At the same time, the company successfully mass-produced multi-spectral CIS, empowering smartphone color reproduction and intelligent detection applications.
The Lingang factory mass-produced 50M CIS, and the competitiveness of single-chip high-pixel chip integration technology continues to increase. During the 24-year reporting period, the company's Lingang plant won the title of “2024 Shanghai Specialized, Special and New Small and Medium Enterprise”; in March 2024, the Lingang factory passed the smart factory certification; in June 2024, the Lingang factory obtained the IATF 16949:2016 quality management system certification, marking that the Lingang plant has reached the high standards of the international automotive industry in terms of automotive electronics design, manufacturing and customer service, laying a solid foundation for the company to enter the automotive front assembly market and provide the industry with high-quality vehicle specification products. At present, the Lingang plant has reached full production. By the end of 2024, the factory has achieved mass production of 8 million, 13 million, and 50 million pixel products. The 50 million pixel products are based on the single-chip high-pixel CIS architecture where the company has mass-produced 32 million pixel image sensors. Through unique FPPI technology, innovative circuit design enables the manufacture of wafers at the same layer as logic and pixels. Ultimately, only one effective wafer is needed to achieve high-pixel, high-performance products. The innovative single-chip high-pixel chip integration technology has been further recognized by the market, and subsequent companies will launch products with higher pixel specifications. At the same time, the Lingang factory also helps to integrate the company's resources on the chip design side and manufacturing side, improve the design and process level in the field of back-illuminated image sensors, accelerate the industrialization of R&D results, enhance the company's core competitiveness, and lay the foundation for the company to increase its market share and expand its leading edge.
Vigorously enrich the layout of non-mobile CIS products, and products in emerging fields are ready to go. In 2024, the company's non-mobile CIS business achieved revenue of 1.426 billion yuan, +17.82% year-on-year, accounting for 22.35% of revenue. The global security market is still in a weak recovery stage. According to Sigmaintell (Sigmaintell) data, the global security CIS market shipped 0.528 billion tablets in 2024, an increase of 10% over the previous year. The company developed a new 4 million pixel product, GC4103, which has an excellent dynamic range, can achieve star-level night vision full-color imaging, and supports low-power doorbells and smart home applications such as Pre-Roll. The company's 8 million pixel products have been introduced to brand customers and mass-produced. In the future, the company will continue to develop, design and optimize the technical requirements of non-mobile applications, including technologies such as optimizing readout circuit noise and extremely low power consumption. Related products are expected to be released in 25 years. In the field of Autos electronics, the company has begun to lay out automotive front-mounted chips and completed the development and streaming of the first automotive front-mounted image sensor. It is expected that the product will be promoted to the market in '25. Furthermore, with continuous innovation and breakthroughs in AI technology and the continuous introduction of Asia Vets glasses products, the AI Asia Vets glasses market will continue to expand in 2024. The company continues to pay attention to the development of related Emerging Markets and actively promotes related technology research and development progress and product implementation. It is expected that products used in the field of AI glasses will be mass-produced in 2025.
Display driver chips are progressing steadily, and the proportion of TDDI continues to increase. In 2024, the company's display driver chip business achieved revenue of 1.356 billion yuan, up 9.47% year-on-year, accounting for 21.26% of revenue. During the 24-year reporting period, the company showed that the driver chip business developed rapidly. Through a series of core technologies such as self-developed design without external components and image compression algorithms, it has greatly improved product competitiveness, covering resolutions from QQVGA to FHD+. The company focuses on the application of small to medium displays in mobile phones, wearables, industrial control and household products. During the 24-year reporting period, the company's ability to differentiate display driver chip products was further improved, and applications in various smart scenarios such as smart homes, medical care, and commercial displays were continuously expanded. At the same time, LCD TDDI products have received orders from internationally renowned mobile phone brands, and the share of sales has increased markedly, and the competitiveness of TDDI products continues to improve. In addition to LCD display driver chips, the company also continues to pay attention to the development of the AMOLED display industry. The company already has relevant technical reserves for AMOLED driver chip products, and will soon launch AMOLED display driver IC products. AMOLED display driver ICs will also become an important growth point for the company in the future.
Investment advice
We expect the company to achieve revenue of 8/10.1/13 billion yuan in 2025/2026/2027, and realized net profit of 0.3/0.7/1.3 billion yuan respectively. The current stock price corresponds to 2025-2027 EV/EBITDA of 27 times, 21 times, and 16 times respectively, maintaining a “buy” rating.
Risk Alerts
Technological innovation risk, product development risk, core technology leak risk, raw material supply and outsourcing risk, high supplier concentration risk, business performance fluctuation risk, consignment model risk, gross margin fluctuation risk, depreciation increase risk, inventory price decline risk, tax preferential policy risk, exchange rate fluctuation risk, accounts receivable recovery risk, downstream market demand falling short of expectations, macro-environmental risk.
