Lontium(SH:688486) Huafu Securities·2024-10-07 09:00Investment Rating - The report initiates coverage with a "Buy" rating for Longxin Co., Ltd. [5][6] Core Views - Longxin Co., Ltd. specializes in the research and development of high-speed mixed-signal chips, with significant potential in AR/VR and automotive applications [2][4] - The company has developed over 140 different chip models, supporting various signal protocols, and has successfully entered the supply chains of several well-known domestic and international enterprises [2][12] - The global market for high-definition video bridging chips is expected to reach 5.574 billion yuan by 2025, with a CAGR of 20.02% from 2020 to 2025 [3][12] - Longxin's target market space is projected to reach 17.5 billion yuan by 2025, driven by diverse applications in security monitoring, video conferencing, automotive displays, and AR/VR [3][12] Summary by Sections 1. Company Overview - Longxin Co., Ltd. focuses on data/video transmission, video processing, and display driver chips, providing comprehensive solutions for high-definition multimedia display [12] - The company has a strong competitive position in the market, ranking first among domestic companies in the high-definition video bridging chip sector [14][17] 2. AR/VR Sector - The AR/VR market presents significant growth potential, with Longxin collaborating with various AR/VR hardware manufacturers [4][35] - The company’s 4K/8K ultra-high-definition video signal bridging chips are compatible with advanced protocols, enhancing flexibility and compatibility for the AR/VR market [38] 3. Automotive Sector - Longxin is actively expanding its presence in the automotive display market, with several chips already certified for automotive applications [4][24] - The automotive SerDes market is expected to grow significantly, with Longxin's products entering the verification testing phase [4][24] 4. Financial Forecast and Investment Recommendations - Longxin is expected to achieve net profits of 1.2 billion yuan, 1.9 billion yuan, and 2.8 billion yuan from 2024 to 2026, with corresponding P/E ratios of 46, 30, and 20 [5][6] - The company has shown resilience against industry downturns, with revenue growth projected at 34% in 2023 and 37% in 2024 [22][24]