Yuanjie Semiconductor Technology (688498) Soochow Securities·2024-10-14 06:30Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [1]. Core Insights - The company is positioned as a leader in the domestic optical chip market, with a comprehensive product line that supports various industry applications [16][17]. - The rise of AI, particularly AIGC technologies, is expected to drive growth in the data communication market, presenting opportunities for domestic manufacturers to replace existing suppliers [2]. - The company's IDM model allows for full-chain coverage from chip design to wafer manufacturing, enhancing its ability to respond to market demands and shorten product development cycles [2]. - The company has received high recognition from downstream clients, having achieved bulk supply to major international and domestic optical module manufacturers [2]. - The report forecasts significant profit growth for the company, with expected net profits of 0.8 billion, 1.7 billion, and 2.2 billion CNY for 2024, 2025, and 2026 respectively [2]. Summary by Sections 1. Domestic Optical Chip Leader - The company has rapidly transitioned from a limited liability company to a publicly listed entity on the Shanghai Stock Exchange, marking a significant milestone in its development [16]. - The product line includes various optical chips with different rates, widely used in fiber access, mobile communication networks, and data centers [17]. - The company has established a fully controllable IDM business model, covering all processes from chip design to testing [17]. 2. Core of the Industry Chain - Optical chips are essential for basic optical communication functions, and their performance directly impacts the efficiency and reliability of communication systems [2]. - The report highlights the high technical barriers in the optical chip industry, making it difficult for new entrants to break into the market [2]. - The demand for optical chips is expected to grow significantly due to the expansion of data centers and the deployment of 5G technology [2]. 3. Profit Forecast and Valuation - The company is expected to achieve a net profit of approximately 81.58 million CNY in 2024, with a significant increase projected for subsequent years [1]. - The report emphasizes the company's strong market position and potential for valuation premium due to its vertical integration in the optical chip industry [2].