Espressif Systems(SH:688018) China Post Securities·2025-09-23 08:58Investment Rating - The report maintains a "Buy" rating for the company, with expectations of significant growth in stock performance relative to the benchmark index [4]. Core Insights - The company is leveraging its capital increase to enhance its capabilities in Wi-Fi 7 and AI edge chips, driven by the growing demand for connectivity in the Internet of Things (IoT) sector. The total amount raised through the stock issuance is expected to be up to RMB 1.778 billion, which will fund various projects including the development of Wi-Fi 7 router chips and AI edge chips [2][4]. - The company's revenue reached a record high in Q2, achieving RMB 688 million, a year-on-year increase of 29.02% and a quarter-on-quarter increase of 23.28%. The net profit attributable to shareholders was RMB 168 million, reflecting a year-on-year growth of 71.45% and a quarter-on-quarter growth of 78.82% [2]. - The acquisition of a majority stake in M5Stack is expected to strengthen the company's influence in the developer ecosystem and accelerate product design processes, creating more business opportunities in the B-end market [3]. Financial Projections - Revenue projections for the company are estimated at RMB 2.68 billion, RMB 3.46 billion, and RMB 4.42 billion for the years 2025, 2026, and 2027 respectively. The net profit attributable to shareholders is projected to be RMB 522 million, RMB 698 million, and RMB 910 million for the same years [4][8]. - The company is expected to maintain a strong growth trajectory, with revenue growth rates of 40.04%, 33.51%, 29.27%, and 27.47% for the years 2024 to 2027 [8]. Company Overview - The latest closing price of the company's stock is RMB 199.41, with a total market capitalization of RMB 31.2 billion. The company has a debt-to-asset ratio of 17.7% and a price-to-earnings ratio of 64.56 [6].