Hygon Information Technology (SH:688041) Shanghai Securities·2025-02-21 06:40Investment Rating - The report assigns a "Buy" rating for the company for the first time [1]. Core Views - The report highlights that the company is a leading domestic high-end processor manufacturer, poised to benefit from the domestic substitution trend and the surge in intelligent computing demand, with expected continuous revenue growth [9][56]. Summary by Sections Company Overview - The company, Haiguang Information, originated from the Chinese Academy of Sciences and is primarily owned by Zhongke Shuguang. It has established a strong foundation through technology licensing agreements with AMD for high-end processor technologies [6][22]. Financial Performance - The company has shown significant revenue growth from 3.79 billion yuan in 2019 to 60.12 billion yuan in 2023, with a compound annual growth rate (CAGR) of 99.55% [6][24]. - Revenue projections for 2024, 2025, and 2026 are 89.31 billion yuan, 125.84 billion yuan, and 165.09 billion yuan, respectively, with net profits expected to reach 18.96 billion yuan, 29.51 billion yuan, and 40.43 billion yuan [9][56]. Product Lines - The company operates two main product lines: CPUs and GPUs. The CPU product line includes the 7000, 5000, and 3000 series, targeting various market segments from high-end servers to entry-level computing [18]. - The GPU product line, particularly the "Deep Computing Unit" (DCU), is designed for high-performance computing applications, including AI and big data processing [18][45]. Market Position and Competitive Advantage - The company benefits from a robust X86 ecosystem, which enhances its competitive edge against international giants like Intel and AMD. The X86 architecture is noted for its extensive software application support [7][38]. - The Haiguang 7390 CPU features 32 cores and 64 threads, with a base frequency of 2.7GHz, showcasing competitive performance against domestic alternatives [7][40]. Growth Drivers - The report emphasizes the increasing demand for intelligent computing, with the intelligent computing market expected to grow at a CAGR exceeding 65% from 2021 to 2030 [8][50]. - The company is well-positioned to capture market share in the domestic X86 server market, which is projected to grow significantly due to government policies promoting domestic chip usage [44]. Research and Development - The company maintains a high R&D expenditure, with R&D expenses consistently around 30% of revenue, reflecting its commitment to innovation and product development [26][30]. Valuation - The report suggests that the company's valuation has upward potential, with projected P/E ratios for 2024, 2025, and 2026 at 166.92, 107.22, and 78.28, respectively, compared to peers [56].