Rockchip(603893) Guotou Securities·2024-05-01 06:00Investment Rating - The report maintains a "Buy-A" rating for Rockchip Microelectronics (603893 SH) with a 6-month target price of 73 4 RMB [1] Core Views - Rockchip Microelectronics achieved rapid growth in automotive electronics industrial applications and machine vision in Q1 2024 with flagship chip RK3588 entering a rapid growth phase [1] - The company is expected to benefit long-term from the increasing demand for edge-side AI computing power particularly with the trend of localized and miniaturized deployment of AI models [1] - Rockchip is strengthening its chip support for AI applications by upgrading NPU IP and related toolchains and expanding AI algorithms in vision video and audio [1] Financial Performance - In Q1 2024 Rockchip reported revenue of 543 million RMB a YoY increase of 64 89% and a net profit of 68 million RMB [1] - The company's gross margin increased by 1 2 percentage points YoY and 1 7 percentage points QoQ [1] - For 2024-2026 the report forecasts revenues of 2 668 billion RMB 3 469 billion RMB and 4 44 billion RMB respectively with net profits of 313 million RMB 597 million RMB and 853 million RMB [1][2] Valuation and Growth - The report uses a PS valuation method with a reference PS multiple of 11 5x based on peers like Allwinner Technology Beken Corporation and Hygon Information [1][4] - Rockchip's PE ratios for 2024E 2025E and 2026E are projected at 77 6x 40 7x and 28 5x respectively while PB ratios are expected to be 7 2x 6 1x and 5 0x [3] - Revenue growth rates for 2024E 2025E and 2026E are forecasted at 25% 30% and 28% respectively [5] Market and Industry Trends - The downstream market has shown recovery with normalized inventory levels among end customers [1] - The trend of hybrid AI where model training is done in the cloud and inference is performed on the edge is gaining traction offering cost energy and privacy advantages [1] - Rockchip's new products like RK3576 and RK2118 are expected to drive growth in 2024 [1]