Espressif Systems (Shanghai) Co.Ltd(688018) (688018)
Deeply cultivate the broad track of the Internet of things, and the performance grows at a high speed
Espressif Systems (Shanghai) Co.Ltd(688018) is a chip design manufacturer focusing on wi fimcu communication chips and modules of the Internet of things. Its products are widely distributed in the fields of the Internet of things such as smart home, wearable devices and industrial control. Considering that the networking of smart home terminals is still in the initial penetration period and superimposed on the company’s sustainable ecological layout, we expect the company’s net profit attributable to the parent company to be RMB 210 / 321 / 461 million from 2021 to 2023, corresponding to EPS of RMB 2.62/4.00/5.75, and the current share price corresponding to PE of 78.3/51.2/35.7 times. For the first time, give a “buy” rating.
The integration of software and hardware strengthened ecological barriers, and the product layout continued to expand.
Unlike traditional chip design manufacturers, which only focus on a single link of chip design, Espressif Systems (Shanghai) Co.Ltd(688018) has the capabilities of chip design, scheme formulation and ecological maintenance, so that customers and makers can get one-stop services; We believe that the competition focus of Internet of things track manufacturers is product ecological maintenance and product convenience, that is, Espressif Systems (Shanghai) Co.Ltd(688018) integrated business model meets the development needs of the track. In terms of chips, Espressif Systems (Shanghai) Co.Ltd(688018) mainly forms four product series: esp8089, esp8266, esp32, esp32-c and esp32-s, covering low, medium and high-end application scenarios. Among them, esp8266 and esp32-c are cost oriented products, and esp32 and esp32-s are high-performance products. Furthermore, in 2021, the company launched the esp32-h2 integrated with DC-DC for low-power scenarios, which further widened the application field of the products.
Smart home penetration may speed up, and wifi6 expands its capacity territory
The smart home market is divided into front loading and back loading markets. In the back loading market, Amazon, Google and apple have announced to join the matter agreement in 2021, which will help accelerate the penetration of the back loading market; In the front loading market, Huawei hilink cooperates with Oppein Home Group Inc(603833) , Midea, Opple Lighting Co.Ltd(603515) and other manufacturers to launch a one-stop front loading home appliance scheme, which will promote the development of the front loading market and strengthen consumers’ recognition of smart home. At the company level, the mass production of wi-fi6 (2.4G) products is expected to be realized in Espressif Systems (Shanghai) Co.Ltd(688018) 2022; compared with wi-fi5, wi-fi6 has faster transmission speed and supports multi terminal parallel transmission, which makes the company’s wi-fi6mcu not only realize intelligent control, but also realize data transmission, so it can be applied to more terminal fields.
Risk warning: there is uncertainty in the R & D Progress of new products; The prosperity of semiconductor industry fluctuates periodically; The expansion speed of downstream customers is uncertain.
