Espressif Technology (688018) First Coverage Report: Internet of Things Swiftly Rising WI-FI MCU Communication Chip Leader Rise Fast

The global Wi-Fi MCU communication chip leader, covering for the first time, gives a “strong recommendation” rating. As a global Wi-Fi MCU chip leader, Lexin Technology is mainly engaged in the development, design, and sales of IoT Wi-Fi MCU communication chips and modules.Widely used in smart home, smart lighting, smart payment terminals, smart wearable devices, sensing devices and industrial control and other IoT fields.

H1 company achieved revenue 3 in 2019.

2.3 billion (+46.

69%), net profit attributable to mother 0.

6.4 billion (+42.

21%), the company’s operating performance continued to improve.

We believe that the Internet of Things industry is highly prosperous, driving the Wi-Fi MCU market to continue to grow, and the company will fully benefit.

It is estimated that the company’s operating income for 2019-2021 will be 7 respectively.

25/9.

93/13.

4.4 billion, net profit attributable to mothers was 1.

48/2.

03/2.

78 ppm, corresponding to an estimated PE of 78/57/41 times.

Covered for the first time and given a “strong recommendation” rating.

The Internet of Things industry is booming, and the Wi-Fi MCU communication chip market is rapidly rising. Wi-Fi technology has the advantages of long communication distance, fast transmission speed, and fast connection. It will become the most widely used wireless communication technology in the Internet of Things field in the future.

According to Gartner’s forecast data, the global IoT connected device reached 83 in 2017.

8.1 billion units, and it is estimated that the number of globally connected devices will reach 204 in 2020.

1.2 billion units.

With the emergence of emerging fields such as the Internet of Things and cloud services, the Wi-Fi chip market will grow rapidly, and the market is expected to grow to 197 in 2022.

$ 200 million.

In the field of Internet of Things, the chips used in the product do not have high processor requirements. It only needs the MCU to bring Wi-Fi functions. The Wi-Fi MCU communication chip uses the Internet of Things as its main application area. According to TSR data, the average annual volume growth rate exceeds50%, significantly higher than the Wi-Fi chip.

We believe that the continued prosperity of the Internet of Things industry will drive the rapid rise of the Wi-Fi MCU communication chip market.

High R & D investment + high cost performance, the rapid rise of IoT Wi-Fi MCU communication chip leader According to the TSR research report, in the field of IoT Wi-Fi MCU chip, the company is the only company with Qualcomm, Texas Instruments, Content, Cypress,Realtek is equal to the mainland enterprises belonging to the first echelon, with a market share of about 30% in 2018.

The company continues to have high R & D investment, outstanding product performance, efficient service system, and active open source ecosystem. The company has been widely recognized by well-known downstream or terminal customers such as 北京夜网 Xiaomi, Tuya Smart, Cobos, Ant Financial and other customers.

We believe that the company has obvious competitive advantages in the Internet of Things Wi-Fi MCU communication chip, and is expected to achieve rapid rise by taking advantage of the Internet of Things.

Risk Warning: Don’t rush to the development of the downstream IoT industry; product development progress is less than expected