Amlogic(688099) 东方财富·2024-10-18 02:23Investment Rating - Buy (First Coverage) with a target price of 89 RMB [3] Core Views - The company is a leader in the domestic multimedia SoC chip design industry, with a diverse product portfolio including set-top box chips, smart TV chips, AI audio-video chips, WiFi chips, and automotive electronics chips [2] - The company's performance improved significantly in the first half of 2024, with operating revenue and net profit attributable to the parent company reaching 3.018 billion RMB and 362 million RMB, respectively, representing year-on-year growth of 28.33% and 96.06% [2] - The set-top box market is experiencing a trend towards high-definition and intelligent upgrades, with significant growth potential in overseas markets [2] - The company is well-positioned to benefit from the domestic substitution trend in the global TV supply chain, with opportunities to increase market share in the TV SoC market [2] - The company's AI audio-video chips and WiFi chips are expected to drive new growth, with the WiFi chip business entering a harvest period as WiFi technology upgrades from 5th to 6th generation [2] Industry Overview Set-Top Box Market - The domestic IPTV/OTT set-top box market is nearing saturation, with annual shipments stabilizing at around 50 million units, while overseas markets have significant growth potential with annual shipments of 40-50 million units [2] - The company has a strong competitive advantage in high-definition chips and holds a significant share in the procurement of major domestic telecom operators [2] - The domestic market is transitioning to 8K high-definition and intelligent set-top boxes, which will drive an increase in product value [2] Smart TV Market - The global TV market is expected to ship 223 million units in 2024, with Chinese brands occupying three of the top five spots in terms of shipments [2] - The TV SoC market is dominated by Taiwanese suppliers, but there is a growing need for mainland suppliers due to supply chain security concerns, providing opportunities for the company to increase its market share [2] - The trend towards high-end smart TVs is creating opportunities for value growth in TV SoCs [2] Smart Home and WiFi Chips - The global smart home market is growing, with AI technology becoming a key driver of development [2] - The company's AI audio-video chips, which feature AI capabilities, are gaining traction in international markets through partnerships with well-known brands [2] - The company's WiFi chips are expected to benefit from the upgrade from WiFi 5 to WiFi 6, which will significantly increase the value of the chips [2] Automotive Electronics - The smart cockpit market is expanding rapidly, and the company's automotive electronics chip business has long-term growth potential [2] Financial Performance - The company's revenue and net profit improved in the first half of 2024, with revenue reaching 3.016 billion RMB, a year-on-year increase of 28.33%, and net profit attributable to the parent company reaching 362 million RMB, a year-on-year increase of 96.06% [18] - The company's gross margin and net margin have stabilized, with gross margin at 35.4% and net margin at 12.0% in the first half of 2024 [19] - The company's R&D expenses as a percentage of revenue decreased, contributing to an expansion in net profit margin [20] Key Assumptions and Profit Forecast - The company's revenue is expected to grow from 6.495 billion RMB in 2024 to 9.210 billion RMB in 2026, with net profit attributable to the parent company increasing from 806 million RMB to 1.363 billion RMB over the same period [5] - The company's EPS is expected to grow from 1.93 RMB in 2024 to 3.26 RMB in 2026, with a corresponding PE ratio of 37x, 28x, and 22x, respectively [5] Valuation - The company is valued using a relative valuation method, with a target PE ratio of 35x for 2025, resulting in a 12-month target price of 89 RMB [5]