Espressif Systems(SH:688018)2024-10-25 10:23Investment Rating - The report maintains an "Add" rating for the company [2] Core Views - The company achieved significant revenue and profit growth in the first three quarters of 2024, with revenue reaching 1.46 billion yuan, a year-on-year increase of 42.17%, and net profit attributable to shareholders of 251 million yuan, up 188.08% year-on-year [1][3] - The company's gross margin improved due to a structural change in revenue sources, with the gross margin for the first three quarters of 2024 at 42.81%, an increase of 2.06 percentage points year-on-year [1][3] - The company is expected to benefit from the recovery in the smart home and consumer electronics sectors, with projected growth rates of 30-35% for the year [1][3] Summary by Sections Financial Performance - In Q3 2024, the company reported revenue of 540 million yuan, a year-on-year increase of 49.96%, and a net profit of 99 million yuan, up 340.17% year-on-year [1] - For the first three quarters of 2024, chip revenue was approximately 562 million yuan, accounting for 38.5% of total revenue, with a year-on-year growth of 52.46% [1] - The company's R&D expenses grew by 19.06% year-on-year to 340 million yuan, which is lower than the revenue growth rate [1][3] Market Outlook - The global smart home market is projected to reach 154.4 billion USD in 2024, with a compound annual growth rate of 10.67% expected until 2028 [1] - The company is expanding its product matrix, with new high-performance chips like ESP32-S3 and ESP32-H4, which are expected to drive future growth [1][3] Earnings Forecast - Revenue forecasts for 2024-2026 are 1.95 billion yuan, 2.51 billion yuan, and 3.06 billion yuan, respectively, with net profits of 342 million yuan, 466 million yuan, and 609 million yuan [3][5] - The expected earnings per share (EPS) for the same period are 3.05 yuan, 4.15 yuan, and 5.42 yuan, with corresponding price-to-earnings ratios of 43, 32, and 24 times [3][5]