Espressif Technology (688018): Expansion of artificial intelligence needs WIFI-MCU leader starts again

Espressif Technology (688018): Expansion of artificial intelligence needs WIFI-MCU leader starts again

Report Introduction: As a leading Wifi-MCU chip company, Espressif Technology has entered the AI field through new product research and development, greatly expanding the market space.

As AI-related revenue continues to grow beyond market expectations, Espressif is expected to become the mainstream AIoT chip platform leader, subverting the perception of the vertical market as a “single product leader in a segmented market.”

Investment points Artificial intelligence products contributed more than expected, the market size of Espressifs expanded, and Espressif was considered 杭州桑拿网 by the market as the leader in the WiFi-MCU single product market.

However, after the introduction of the WiFi-AI integrated chip in 2016, driven by the rapid growth of AI demand, the related revenue contribution continued to increase, exceeding market expectations: 2017, 2018, 2019E, and AI-related business revenue were 27 million and 1, respectively.

28 billion, 2.

2.6 billion; the proportion of income is also rising (10%, 27%, 30% +).

These higher numbers of uplinks in the future make Espressif expected to become the platform-level chip leader for mainstream Internet of Things applications, surpassing market-oriented cognition.

Ecosystem construction further deepens, Espressif’s customer stickiness strengthens. In 2019, Espressif further deepens the construction of the smart home ecosystem: not only release development kits for AI faces and speech recognition, but also help customers open up with Microsoft, Google, Tencent,The fast track of Bluetooth technology linkage has accelerated its product development process and market promotion progress.

As a result, Espressif further embeds customer business processes and services, deepens customer relationships, and increases customer stickiness.

The smart home market has continued to explode. Espressif has broad space for technology. The global smart home market has exploded. IDC institutions have revised the global smart home replacement forecast for two consecutive years.

According to the latest IDC forecast, by 2021, the global smart home restructuring volume may double from 2018.

Espressif has ample room for growth.

Earnings forecasts and estimates follow reasonable assumptions. We expect Espressif’s total operating income from 2019 to 2021 to be 7.

320,000 yuan, 11.

50,000 yuan, 17.

8.8 billion, a ten-year growth rate of 54%, 57%, and 55%.

The corresponding PS is 28.

26x, 17.

98x, 11.

56x; net profit is 1.

630,000 yuan, 2.

710,000 yuan, 4.

22 trillion, a year-on-year growth rate of 73.

96%, 65.

65%, 56.

05%.

Following the PS estimation method, the target price in 2020 is about 303 yuan.