Guokewei: Broadcast TV and intelligent monitor chip manufacturers, layout solid-state storage in advance

For the first time, we will give a cautious overweight rating with a target price of 62.04 yuan. As the mainstream supplier of domestic broadcast TV and intelligent monitoring chips, the company has gradually shifted its business focus in recent years, and has strategic layout in the field of solid-state storage and IoT chips. The main control products have been realized. Mass production and full-scale entry into the consumer market, performance has growth potential. We expect the company's 2018-20 EPS to be 0.67, 1.32, 1.60 yuan, giving the company 47 times PE in 2019, target price 62.04 yuan.

The company covers a wide range of businesses, and the traditional business still has growth. The emerging business market has a broad space. The company has four major product lines: broadcast TV chips, intelligent monitoring chips, solid-state memory chips, and IoT chips. On the one hand, it will benefit from radio and television, and intelligence. Monitor the market high-definition, network upgrade trend, on the other hand, solid-state storage and IoT market demand is constantly improving under the pull of smart phones, tablets, laptops, smart homes, smart cars, providing room for growth of the company's related chip segmentation business .

Continue to invest in high-intensity R&D, and lay out solid-state storage and IoT in advance. The company's annual R&D expenditure accounts for more than 20% of revenue, while maintaining the technological advantages of traditional broadcast TV and intelligent surveillance services, while in the solid-state storage and IoT sectors. A large number of R&D resources have been poured into the market, and the strategic layout has been carried out in advance. At present, it has passed the certification and mass production, cut into the consumer market, and continuously expanded the product coverage field. In the future, it is expected to continue to break through in the process of semiconductor localization under the national strategic direction.

Catalyst: domestic broadcast TV, intelligent surveillance market upgrade and solid-state storage, the rapid growth of the Internet of Things market.

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