Core Viewpoint - The storage industry is recovering, with leading companies like Zhaoyi Innovation reporting significant revenue and profit growth, driven by increased demand in various sectors and strategic market positioning [1][6][10]. Group 1: Financial Performance - Zhaoyi Innovation's revenue for the first half of 2025 reached 4.15 billion yuan, a year-on-year increase of 15%, while net profit attributable to shareholders was 575 million yuan, up 11.31% [1]. - The company's storage chip revenue in 2024 was 5.194 billion yuan, accounting for 70.6% of total revenue, with MCU business contributing over 90% of revenue [6][10]. - The company experienced a revenue decline from 8.13 billion yuan in 2022 to 5.761 billion yuan in 2023, followed by a recovery to 7.356 billion yuan in 2024 [10]. Group 2: Market Position and Global Expansion - Zhaoyi Innovation is the only company globally to rank in the top ten across four core integrated circuit design areas, including NOR Flash and MCU [1]. - The company has established a global sales network across Asia, Europe, and North America, with overseas revenue accounting for 77.51% in 2024 and 69.51% in the first half of 2025 [3][11]. - The company is recognized as the world's leading fabless Flash supplier, with significant contributions from automotive-grade products [3][4]. Group 3: Industry Trends and Strategic Moves - The company is capitalizing on the exit of major players like Samsung and Micron from niche storage markets, creating opportunities for domestic manufacturers [8]. - Zhaoyi Innovation is expanding its overseas presence, with plans for an H-share listing and the establishment of a new international headquarters in Singapore [4][5]. - The company is focusing on local innovation to shorten the time from product development to market, enhancing its competitive edge in various sectors, including automotive and AI [5][7]. Group 4: Customer Base and Product Diversification - The customer base of Zhaoyi Innovation spans consumer electronics, automotive, and industrial control sectors, reflecting a diversified revenue stream [7][9]. - The company has established itself as a key supplier for major brands in the consumer electronics space and is increasingly penetrating the automotive sector [6][9]. - The demand for storage solutions in AI applications is rising, with the company poised to meet the needs of new AI-enabled devices [7].

Core Viewpoint - The company expects significant growth in net profit and revenue for the first half of 2025, driven by strong performance in its CIS products and market penetration in various applications [1][3]. Financial Performance - The company anticipates a net profit attributable to shareholders of between 1.906 billion and 2.046 billion yuan for the first half of 2025, representing a year-on-year increase of 39.43% to 49.67% [1]. - The expected revenue for the same period is projected to be between 13.722 billion and 14.022 billion yuan, reflecting a year-on-year growth of 13.49% to 15.97% [1]. - For Q2 2025, the company is expected to achieve a revenue of approximately 7.4 billion yuan, marking a year-on-year increase of 14.77% [2]. Market and Product Insights - The company's CIS products are experiencing continuous penetration in downstream markets, particularly in automotive smart driving and action cameras, contributing to revenue growth [3]. - The smartphone sector is expected to see a boost in the second half of the year, with the promotion of various camera modules in flagship Android models [3]. - The automotive market is projected to generate approximately 5.905 billion yuan in revenue from CIS in 2024, with a year-on-year increase of about 29.85% [3]. - The action camera market is expected to grow rapidly, with a projected CAGR of 14.5% from 2017 to 2023, reaching a market size of 51.35 billion yuan by 2027 [3]. Investment Outlook - The company is projected to have earnings per share of 3.70 yuan and 4.79 yuan for 2025 and 2026, respectively, with corresponding PE ratios of 32 times and 25 times [3].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Insights - The company, Zhaoyi Innovation, is a leading domestic player in storage and MCU sectors, benefiting from a platform-based layout that supports its growth [4][12] - The company's revenue has shown a compound annual growth rate (CAGR) of 22.45% from 1.189 billion to 7.356 billion from 2015 to 2024, while net profit has grown from 0.158 billion to 1.103 billion with a CAGR of 24.11% [4][26] - The storage market is expanding due to the growth of edge AI and automotive trends, providing opportunities for domestic manufacturers as global competitors withdraw from niche storage markets [4][41] - The MCU business is positioned as a leader in the domestic 32-bit MCU market, with significant investments planned for automotive electronics [4][41] Summary by Sections 1. Company Overview - Zhaoyi Innovation was established in 2005 and listed on the Shanghai Stock Exchange in 2016, adopting a fabless production model that focuses on IC design while outsourcing manufacturing [4][12] - The company has diversified its product offerings from NOR Flash to include DRAM, NAND, and MCU, achieving a leading position in the domestic market [4][12][16] 2. Storage Business - The global semiconductor storage market is expanding, driven by edge AI and automotive trends, with Zhaoyi Innovation's comprehensive layout in storage products [4][41] - The company has developed a rich product line in specialized storage, ranking among the top ten globally in NOR Flash, SLC NAND Flash, and niche DRAM [4][41] 3. MCU Business - Zhaoyi Innovation is the domestic leader in 32-bit MCUs, with a projected revenue of approximately 231 million USD from MCU sales in 2024, ranking eighth globally [4][41] - The company is enhancing its automotive electronics capabilities with new high-performance MCU products and significant investments in R&D [4][41] 4. Financial Performance - The company reported a revenue of 7.356 billion in 2024, a year-on-year increase of 27.69%, and a net profit of 1.103 billion, reflecting a substantial recovery from previous downturns [4][27][31] - The revenue structure shows that storage chips and MCUs account for over 90% of total revenue, with storage chips contributing 70.6% [4][31] 5. R&D and Innovation - Zhaoyi Innovation has significantly increased its R&D investment, with expenses rising from 208 million to 1.122 billion from 2018 to 2024, representing a CAGR of 32.43% [4][37] - The company holds over 1,059 authorized patents, showcasing its commitment to innovation and technology leadership in the semiconductor industry [4][37]

Core Viewpoint - The company, Zhaoyi Innovation Co., Ltd., has established itself as a leading player in the domestic storage and MCU markets, benefiting from a platform-based layout that supports its growth [1] Group 1: Company Overview - Zhaoyi Innovation was founded in 2005 and listed on the Shanghai Stock Exchange in 2016, adopting a fabless production model [1] - The company has diversified its product structure from its initial focus on NOR Flash to include "storage + control + sensing + analog" across four major business areas, achieving a leading position in the storage and MCU sectors [1] - From 2015 to 2024, the company's revenue is projected to grow from 1.189 billion yuan to 7.356 billion yuan, with a compound annual growth rate (CAGR) of 22.45%, while net profit is expected to rise from 158 million yuan to 1.103 billion yuan, with a CAGR of 24.11% [1] Group 2: Storage Business - The global semiconductor storage market is expanding due to the growth of edge AI and the "three transformations" in the automotive sector, which increases demand for storage products [2] - Zhaoyi Innovation has a rich layout in specialized storage, forming three major product lines: "NOR + DRAM + NAND," and is the only domestic integrated circuit design company ranked in the global top ten for NOR Flash, SLC NAND Flash, niche DRAM, and MCU [2] - The exit of overseas giants from niche storage areas presents growth opportunities for domestic manufacturers like Zhaoyi [2] Group 3: MCU Business - Zhaoyi Innovation is recognized as the domestic leader in 32-bit MCUs, with projected MCU revenue of approximately 231 million USD in 2024, ranking eighth globally and first in mainland China [3] - By the end of 2024, the company has successfully mass-produced 63 product series and over 700 MCU products, covering high-performance, mainstream, entry-level, low-power, wireless, automotive, and specialized products [3] - The company has launched a new generation of automotive-grade MCUs with high-performance M7 cores, designed for various electrification applications in vehicles [3] - A new investment project for automotive electronic chip R&D and industrialization, with a total planned investment of approximately 1.2 billion yuan, aims to enhance the company's high-end MCU product development capabilities [3]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Viewpoints - The company is a domestic leader in storage and MCU sectors, benefiting from a platform-based layout that supports growth [4] - The company's revenue is projected to grow significantly, with earnings per share expected to reach 2.27 CNY, 3.04 CNY, and 3.88 CNY for 2025, 2026, and 2027 respectively, corresponding to valuation multiples of 52.88x, 39.56x, and 30.96x [4] Summary by Relevant Sections Company Overview - The company, founded in 2005 and listed in 2016, operates under a fabless model and has diversified its product offerings from NOR Flash to include storage, control, sensing, and analog products, achieving a leading position in the domestic market [4][12] - From 2015 to 2024, the company's revenue grew from 1.189 billion CNY to 7.356 billion CNY, with a compound annual growth rate (CAGR) of 22.45%, and net profit increased from 158 million CNY to 1.103 billion CNY, with a CAGR of 24.11% [4][26] Storage Business - The global semiconductor storage market is expanding due to the growth of edge AI and the automotive sector, with the company positioned to benefit from this trend [4][43] - The company has a comprehensive layout in specialized storage, being the only domestic integrated circuit design company ranked in the global top ten for NOR Flash, SLC NAND Flash, niche DRAM, and MCU [4][12] MCU Business - The company is a leader in the domestic 32-bit MCU market, with projected revenue of approximately 231 million USD from MCU sales in 2024, ranking eighth globally [4] - The company has launched high-performance automotive-grade MCU products, enhancing its presence in the automotive electronics sector [4] Financial Performance - In 2024, the company achieved a revenue of 7.356 billion CNY, a year-on-year increase of 27.69%, and a net profit of 1.103 billion CNY, a year-on-year increase of 584.21% [27] - The revenue structure shows that storage chips accounted for 70.6% of total revenue, while microcontrollers contributed 23.2% [30] Research and Development - The company has significantly increased its R&D investment, with expenses rising from 208 million CNY in 2018 to 1.122 billion CNY in 2024, representing a CAGR of 32.43% [37] - As of the end of 2024, the company holds 1,059 authorized patents, reflecting its commitment to innovation and technology leadership [37]