Huaqin Technology (603296) 广发证券·2024-05-27 03:02Investment Rating - The report gives a "Buy" rating for the company with a target price of 102.08 CNY per share for 2024, based on a 24x PE multiple [1] Core Views - The company is a global leader in the smart hardware ODM industry, with a "2+N+3" strategic layout covering smartphones, laptops, tablets, wearables, AIoT, and servers [1] - The company has a strong position in the smartphone ODM market, maintaining the top global market share for many years [1] - The company is well-positioned to benefit from the AI era and automotive electronics, with strategic early moves in AI servers and car electronics [1] - The company's revenue is expected to grow from 101.5 billion CNY in 2024 to 130.4 billion CNY in 2026, with EPS projected to increase from 4.25 CNY to 5.96 CNY over the same period [2] Business Overview Global Smart ODM Leader - The company has evolved from a mobile IDH business to a comprehensive ODM model, covering R&D, manufacturing, and logistics for smartphones, laptops, tablets, wearables, AIoT, and servers [10] - The company's "2+N+3" strategy focuses on smartphones and laptops as core businesses, while expanding into data center products, automotive electronics, and software [11] - The company has established five R&D centers and five manufacturing bases globally, including locations in Vietnam, India, and Mexico [27] Financial Performance - Revenue grew from 30.88 billion CNY in 2018 to 85.34 billion CNY in 2023, with a CAGR of 22.54% [13] - The company's revenue growth outperforms Taiwanese ODM peers, with a 2019-2023 CAGR of 24.69% [15] - The company's gross margin and net margin are higher than those of Taiwanese ODM peers, driven by its product mix and efficient manufacturing capabilities [20] R&D and Innovation - The company has significantly increased its R&D investment, from 2.43 billion CNY in 2020 to 5.05 billion CNY in 2022, with a CAGR of 44.1% [26] - The company has 2,380 patents in China, including 949 invention patents, and has mastered five core technologies: wireless network antenna design, RF technology, circuit system design, structural design, and low-power design [26] Growth Drivers Smartphone ODM Market - The company holds a 27.9% market share in the global smartphone ODM market, ranking first globally [42] - The ODM penetration rate in the smartphone market is expected to reach 42% by 2025, driven by the company's ability to deliver cost-effective and innovative solutions [39] Laptop and Tablet ODM Market - The company has a 5.2% market share in the laptop ODM market and is one of the few companies capable of designing both Arm and X86 architectures [47] - The company is the global leader in the tablet ODM market, with significant growth potential as Chinese companies gain more market share [65] AI Servers and Automotive Electronics - The company is well-positioned in the AI server market, with products like the H800 and L20 AI servers, and is expected to benefit from the growing demand for AI computing power [57] - The company has entered the automotive electronics market, focusing on four key areas: cockpit, vehicle control, autonomous driving, and connectivity [63] Future Outlook - The company's high-performance computing business, including PCs, tablets, and servers, is expected to grow from 600.55 billion CNY in 2024 to 783.90 billion CNY in 2026, driven by AI PC adoption and server demand [65] - The company's AIoT and automotive electronics businesses are expected to contribute significantly to future growth, with the automotive electronics business already securing orders from major OEMs [63]