Espressif Systems(SH:688018) KAIYUAN SECURITIES·2024-10-14 15:07Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company is expected to achieve significant revenue growth in the first three quarters of 2024, with projected revenue of 1.46 billion yuan, representing a year-on-year increase of 42.17%. The net profit attributable to shareholders is expected to reach 251 million yuan, up 187.95% year-on-year [1] - The company's product release schedule is in line with expectations, and the growth in product volume is anticipated to drive performance increases. The forecasted net profits for 2024-2026 are 337 million yuan, 456 million yuan, and 609 million yuan respectively, with corresponding P/E ratios of 39.4, 29.1, and 21.8 times [1][2] Summary by Sections Revenue and Profitability - In Q1-Q3 2024, the company benefits from the increasing digitalization and intelligence penetration across various industries, leading to revenue growth. The classic products remain stable, while new product categories (such as ESP32-S3, C2, and C3) are experiencing rapid growth [2] - The gross margin is expected to remain above 40%, and R&D investment growth is around 20%. The operating leverage effect is driving profit growth due to revenue growth exceeding 20% year-on-year [2] Market Potential and Product Expansion - The global smart home market is projected to reach 154.4 billion USD in 2024, with a compound annual growth rate of 11% over the next five years. The company has launched a new dual-core RISC-V SoC, ESP32-P4, designed for high-performance and high-security applications, which is expected to expand the market capacity by 2.5 times [3] - The continuous penetration of downstream intelligence and the expansion of the company's product matrix are expected to provide ample growth momentum for revenue [3] Financial Forecasts - The company's financial forecasts indicate a revenue increase from 1.27 billion yuan in 2022 to 2.03 billion yuan in 2024, with a year-on-year growth rate of 42.3%. The net profit attributable to shareholders is projected to grow from 97 million yuan in 2022 to 337 million yuan in 2024, reflecting a year-on-year increase of 147.3% [4] - The gross margin is expected to improve slightly from 40.0% in 2022 to 43.7% in 2024, while the net profit margin is projected to increase from 7.7% to 16.5% over the same period [4][6]