The company is an internationally renowned data processing and connected chip design company. The company's 23-year performance was under pressure due to the downturn in traditional data centers. But entering the AI era, the company's products are deeply in line with the demand for high computing power, while the new connected products are expected to add momentum to the company's long-term growth and maintain a buy rating.

support rating points

demand downturn to 23 years of performance pressure, continuous innovation to embrace the future. Since its establishment, the company in line with market trends, products continue to introduce new. The company launched DDR2 service memory buffer chip products in 2005, and since then, along with the DDR upgrade iteration, the company has actively implemented the global memory interface industry standard development, and continued to invest in research and development for product upgrades. At the same time, the company continues to enrich the product matrix, and now has two major product lines: interconnect chips and Zinji? Server platform. In 2023, due to customer destocking due to declining demand in the global server and computer industries, the company's memory interface chips and CPU shipments decreased significantly compared to the previous year. CPU shipments decreased significantly compared to the previous year. With the industry inventory de-stocking and inventory management is beginning to bear fruit, the company's deep industry accumulation is expected to escort long-term growth.

data center boom recovery + DDR5 continued penetration, child iteration drive interface chip steady growth. Data centers are expected to see restorative growth due to a new round of capital spending growth from the world's major cloud computing vendors and increased demand for high-end AI servers. According to Bloomberg's forecast, capital spending by the four North American Internet companies will enter the upward range in 2024. Memory interface chip certification, high technical barriers, the industry pattern is highly concentrated, the company expects DDR5 penetration rate is expected to exceed 50% in 2024, while DDR5 memory interface chip will continue to carry out sub-generation iteration, the company has released the fourth sub-generation DDR5 interface chip products. We believe that with the increase in penetration of DDR5 and more child versions, the company's sales unit price and revenue are expected to maintain solid growth.

new interconnection products are expected to blossom at more points, and platform design companies are opening up room for growth: 1)PCIe Retimer:PCIeRetimer chips are important interconnection chips in the future data center field. in January 2023, the company will mass produce PCIe5.0/CXL 2.0 Retimer chips, which is the second manufacturer in the world to announce mass production of this product; 2)MXC: CXXC chip arises at the historic moment based on the downstream demand for continuous growth of memory capacity, it is mainly applied to memory expansion and memory pooling. The company has cooperated with many of the world's top cloud computing vendors and memory leaders. 3)MRCD/MDB: There are 2 suppliers worldwide that can provide DDR5 first-generation MRCD/MDB chips (with a support rate of 8800MT/S). The company takes the lead in formulating international standards for MDB chips, and the products have a competitive advantage. 4)CKD: According to the latest product roadmap of CPU manufacturers, its client CPU platform supporting DDR5 6400MT/s is expected to be released this year. The company's CKD chips are progressing smoothly and are expected to be shipped on a synchronous scale.

valuation

considering the recovery of storage and data center demand and the increase of demand for interconnected products in AI era, the company is expected to usher in multi-dimensional growth drive. we expect the company to realize operating income of 22.86/43.53/6.202 billion yuan in 2023/2024/2025, net profit attributable to parent of 4.50/14.76/2.285 billion yuan respectively, and corresponding PE of 116.3/35.4/22.9 times respectively, maintain a Buy rating.

the main risks facing the rating

storage market recovery progress is less than expected, DDR5 penetration is less than expected, new product development is less than expected, the international environment is unstable.