Investment Highlights

A leading manufacturer of storage solutions with "R&D, packaging and testing integration", and adheres to the medium and long-term strategic layout of "5+2+X

".　　　 The company has been deeply engaged in the field of memory for more than 20 years, and is committed to becoming the world's first-class storage and advanced packaging and testing manufacturer. In terms of business model, the company adopts the integrated mode of R&D, packaging and testing, which integrates storage media characteristics research, firmware algorithm development, main control chip design and selection, memory chip packaging and testing, testing and R&D, which brings strong competitive advantages to the company in terms of product innovation and development efficiency, production capacity and quality assurance, and effectively guarantees the company's entry into the first-line customer supply chain. In terms of medium and long-term strategy, the company adheres to the "5+2+X" layout, focuses on the five major application markets of mobile phones, PCs, servers, smart wearables and industrial vehicle regulations, regards chip design and wafer-level advanced packaging and testing as two important starting points for the secondary growth curve, and carries out a comprehensive layout in innovative fields such as storage and computing integration, new interfaces, new media and advanced test equipment.



Since the second half of 24 years, affected by factors such as weak downstream demand and channel destocking, storage prices have not improved significantly, in order to cope with the situation of oversupply, Samsung, SK hynix, Micron, Kioxia and other major memory manufacturers announced production reduction plans again at the end of 2024, and the effect of production reduction gradually appeared after the first quarter, and the supply and demand pattern of memory products gradually improved. At the same time, AI drives the demand for large-capacity and high-performance storage solutions, AI requires powerful data storage and computing capabilities to support work, and server-side and storage play an important role as "data infrastructure".

The company is the only comprehensive solution service provider in China with storage + wafer-level advanced packaging and testing capabilities

The company attaches great importance to the construction of packaging and testing capabilities, and is the first in the industry to carry out the integrated layout of R&D packaging and testing, after more than ten years of accumulation, the company has 16-layer stacked die, 30~40μm ultra-thin die, multi-chip heterogeneous integration and other advanced process mass production capabilities. At the same time, in the wave of end-side intelligent upgrading, the product form continues to evolve to miniaturization and high integration, and the architecture of the system SOC is facing the dual challenges of physical space compression and computing power surge. The company's wafer-level packaging and testing project is expected to be officially put into operation in 2025, and will become the only comprehensive solution service provider with storage + wafer-level advanced packaging and testing capabilities in China, and is expected to become an important growth pole for the company in the future. On the one hand, it can meet the needs of advanced storage packaging, build a technical foundation for the company's R&D and production of advanced storage products, and provide relevant packaging capacity. On the other hand, it can cooperate with the company's storage business to serve the needs of the company's customers for the storage, computing and sealing business, and provide packaging and testing services for related customers. The

general trend of domestic substitution of memory, the company has created a full series, differentiated and high-quality product system storage is a very distinct shortcoming of China's semiconductor industry, under the influence of geopolitics, the demand for localized substitution is clear, in this context, the company has created a full series, differentiated and high-quality product system, the company's product competitiveness is leading in China, and at the same time, with a complete industrial chain layout, the company can meet the customized needs of customers, to provide customers with stable product delivery, Efficient product development and rapid service response, with clear market share growth space. Specifically, in the automotive market, the company's products have been mass-produced by domestic leading car companies and Tier1 customers, in the mobile phone market, the company's embedded storage products have entered OPPO, Transsion Holdings and other well-known customers, and the market share is expected to continue to increase, in the PC pre-installation market, the company has entered the supply chain of well-known PC manufacturers at home and abroad, such as Lenovo, Hongqi, Tongfang, Foxconn, etc., and occupies a share advantage in the domestic non-x86 market.

The AI device side ushered in a period of industry explosion, and with the blessing of the company's core

AI model, the AI device side has been empowered like never before. Take this year's AI glasses as an example: the new voice interaction has greatly improved the interactive experience of smart glasses, so AI glasses can achieve the unity of portability and function to meet the diverse needs of consumers in daily life and work, and the popularity of Ray-BanMeta has also triggered the rapid follow-up of many brand manufacturers at home and abroad, such as Thunderbird, Rokid, and Xiaomi. We believe that the sales volume of AI glasses is expected to reach 100 million in the 2030s, becoming the terminal variety that is most likely to be close to smartphones in scale. The company has many advantages such as multi-type product layout, self-developed patented technology, manufacturing and supply chain system in terms of miniaturization and high integration of storage solutions, so as to meet the customized needs of customers. At present, the company has entered the supply chain of well-known AI/AR glasses manufacturers at home and abroad such as Meta, Rokid, and Thunderbird Innovation, and occupies the main market share, with the company's smart wearable storage revenue of about 800 million yuan in 2024, and the revenue of smart wearable core chips ranks in the forefront, so the company will fully benefit from the rapid growth of the AI end side in the future.

C-end consumer-grade storage has a clear growth space, providing the company with brand power appreciation and cash flow rapid turnoverThe company also operates its own brand BIWIN and authorized brands HP, Hongqi, Predator and Lenovo (overseas region), and the coverage of the operating brand is ahead of other domestic storage solution manufacturers, especially the company's Hongqi and Predator brands have strong influence, and the sales volume ranks at the top of the Jingdong list The consumer-level business has clear room for growth. From another point of view, the turnover speed of the C-end business is significantly stronger than that of the 2B-end direct sales customers, which is a very good source of cash flow for the company, and with the gradual increase of market share in the future, the C-end business will play a very important balance role in the company's revenue and profit in the fluctuation of the industry cycle.

Profit forecast and valuation

It is estimated that the operating income from 2024 to 2026 will be 6.704 billion yuan, 8.532 billion yuan and 10.864 billion yuan respectively, a year-on-year increase of 86.71%, 27.26% and 27.33%, and the corresponding net profit attributable to the parent company will be 176 million yuan, 544 million yuan and 965 million yuan respectively, and the PE corresponding to the current market value will be 157, 51 and 29 times respectively, which is covered for the first time and given a buy rating.

Risk Warning:

Downside risk of storage cycle; the risk that R&D progress is not as expected; The company's customer expansion is less than expected