GigaDevice(SH:603986) CSC SECURITIES (HK) LTD·2025-05-19 08:25Investment Rating - The report assigns a "Buy" rating to the company, indicating a potential upside in the stock price [5][8]. Core Views - The company has shown strong performance in the first quarter of 2025, with revenue and net profit both recording double-digit growth despite a backdrop of declining global storage product prices. This performance is attributed to the company's position as a leader in the domestic storage sector and its expected benefits from the recovery of the semiconductor demand [5][8]. - The report anticipates a recovery in the storage and MCU (Microcontroller Unit) industries starting from the second quarter of 2025, which is expected to accelerate the company's earnings growth [5][8]. Summary by Sections Company Overview - The company operates in the electronics industry, with a stock price of 122.29 RMB as of May 16, 2025. The market capitalization is approximately 81.17 billion RMB, and the major shareholder is Zhu Yiming, holding 6.89% of shares [3]. Financial Performance - In Q1 2025, the company achieved revenue of 1.91 billion RMB, a year-over-year increase of 17.3%, and a net profit of 230 million RMB, reflecting a 14.5% increase year-over-year. The performance is notable given the overall decline in global storage market prices [8]. - The report projects net profits for 2025, 2026, and 2027 to be 1.58 billion RMB, 2.11 billion RMB, and 2.71 billion RMB, respectively, with year-over-year growth rates of 43%, 34%, and 28% [7][8]. Market Outlook - The global storage market is expected to see price increases starting in Q2 2025, driven by AI demand and capacity control by storage manufacturers. The company is positioned to benefit from this trend as a leading supplier of Nor Flash and niche DRAM products [8]. - The MCU industry is also expected to recover, with the company being the largest supplier of 32-bit MCUs in China, which is projected to experience rapid growth starting in 2025 [8]. Valuation Metrics - The current stock price corresponds to a PE ratio of 30 times for 2027, indicating a favorable valuation for potential investors [5][8].