VeriSilicon(SH:688521) CSC SECURITIES (HK) LTD·2025-08-04 07:37Investment Rating - The report assigns a "Buy" rating for the company, indicating a potential upside of 15% to 35% [9][15]. Core Insights - The company is recognized as the leading IP enterprise in China, leveraging its IP resources and R&D capabilities to provide comprehensive chip customization services from design to mass production. The growth in its volume business and new orders reflects the increasing demand driven by AI and IoT [9]. - The company is expected to benefit from the ongoing transformation in the industry, particularly as internet firms continue to invest in AI computing capabilities, enhancing their specialized processing chip (ASIC) strategies [9]. - The stock is currently trading at a price-to-sales (P/S) ratio of 11 times for 2027, maintaining the "Buy" recommendation based on significant performance potential [9]. Financial Performance Summary - For Q2 2025, the company anticipates a revenue of 584 million RMB, representing a 49.9% quarter-over-quarter increase but a 4.7% year-over-year decline. The IP licensing revenue is expected to be 187 million RMB, up 99.6% quarter-over-quarter and 17% year-over-year [12]. - The company has a robust order backlog of 3.025 billion RMB, which has remained high for seven consecutive quarters, providing a solid foundation for future revenue growth [12]. - Revenue projections for 2025-2027 are 3.067 billion RMB, 3.384 billion RMB, and 4.740 billion RMB, with year-over-year growth rates of 32%, 25%, and 23% respectively. Net profits are forecasted to be -26 million RMB, 53 million RMB, and 201 million RMB for the same period [12][11]. Shareholder Information - The major shareholder is Xinyuan Co., Ltd., holding 14.40% of the shares. The company has a total market capitalization of 47.326 billion RMB, with 525.71 million shares issued [2]. - The stock price as of August 1, 2025, was 94.49 RMB, with a 12-month high of 111 RMB and a low of 24.45 RMB [2]. Product Mix - The company's revenue composition includes 43.4% from chip volume business, 33.5% from IP licensing fees, 17.8% from chip design services, and 5.3% from royalties [4]. Market Position - The company has a significant presence among institutional investors, with 29.7% of the circulating A-shares held by funds [6]. The stock has shown a strong performance relative to the market, with a 181.7% increase over the past year [2].