Hygon Information Technology (688041) 德邦证券·2024-12-04 08:23Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company is a leading player in high-end processors, leveraging its state-backed status and technological origins from AMD to achieve independent iteration [3] - The company's DCU (Deep Computing Unit) is expected to benefit from the generative AI boom, with potential for significant market expansion in commercial sectors such as the internet [3] - The CPU business is poised to capture a substantial share of the x86 commercial market, driven by strong ecosystem support and increasing demand in the server market [4] - The company's financial performance is expected to grow significantly, with projected revenue and net profit increases from 2024 to 2026 [5] Market Performance - The company's stock has shown significant volatility, with a 62.14% absolute increase over the past three months, outperforming the CSI 300 index [2] CPU Business - The company's CPU products are compatible with the x86 instruction set, which dominates the server market with an 88% share in 2023 [4] - The x86 server market in China is expected to grow by 5.7% in 2024, reaching a market size of 306 billion yuan [4] - The company has completed product refinement in the domestic market and is expected to expand into the internet customer base, driving future growth [4] DCU Business - The DCU market is expected to benefit from the AI boom, with the Chinese accelerated server market projected to reach $12.4 billion by 2028, growing at a CAGR of 5.7% from 2023 [3] - The company's DCU products are compatible with mainstream AI frameworks and have achieved leading domestic performance in large model applications [3] Financial Projections - Revenue is projected to grow from 8.154 billion yuan in 2024 to 14.513 billion yuan in 2026, with a CAGR of 30.27% [5] - Net profit is expected to increase from 1.647 billion yuan in 2024 to 3.023 billion yuan in 2026, with a CAGR of 31.97% [5] - The company's PE ratio is expected to decrease from 177.0 in 2024 to 96.4 in 2026, reflecting strong growth prospects [5] Industry Trends - The AI server market in China is growing rapidly, with the internet sector accounting for nearly 60% of the accelerated server market in 2023 [56] - The government and operators are increasing investments in AI infrastructure, with operators expected to spend over 110 billion yuan on computing in 2024 [62] Competitive Advantages - The company's DCU products are compatible with the "CUDA-like" environment, providing a strong ecosystem advantage for AI applications [66] - The company's CPU products have strong compatibility with mainstream operating systems and software, making them suitable for a wide range of applications [80] Supply Chain and Inventory - The company has significantly increased its prepayments and inventory, indicating improved upstream supply and optimistic demand forecasts [46] - Inventory levels have risen sharply, with a 177.84% year-on-year increase in Q2 2024, reflecting strong demand and supply chain improvements [46]