3PEAK INCORPORATED(688536)：CHINESE ANALOG CHIP LEADER;PLATFORM-BASED EXPANSION GENERATING NEW SOURCES OF GROWTH

Investment positives
We initiate coverage with an OUTPERFORM rating and a target price of Rmb804.78, corresponding to 37x 2026e P/E.
Why OUTPERFORM rating?
A leader in signal chain technology in China; accelerating expansion into power supply products; two growth engines to open up more room for development. 3Peak has leading technological capabilities in the field of signal chain in the analog chip industry, which features high barriers to entry. The firm has also stepped up expansion into power management products. Such efforts have started to bear fruit, driving swift earnings growth. Globally, the power management product market has larger upside for growth. Considering that signal chain technology and capable and experienced workforce can help drive the expansion of the firm’s power management product line, and taking into account the overlapping customer base, we believe that power management and signal chain products will help the firm generate more growth opportunities.
Strengthening presence in fields with high barriers to entry, e.g., communications, pan-industrial, and auto fields; import substitution and strong sentiment of downstream markets could boost earnings. The firm focuses on communications and pan-industrial fields. Considering the high value-added and rapid growth of related areas, we are optimistic that the firm will benefit from development opportunities in communications and pan-industrial segments in the short to medium term, leveraging its advantages in technologies and customer base, as well as strong presence in the domestic communications and pan-industrial analog chip segments. In addition, the firm has been expanding into the auto market for years, with a number of auto electronic products under long-term development. In the long term, we are upbeat that auto-related businesses will generate new sources of earnings growth.
Chinese analog chip leader well positioned to benefit from import substitution and to continue expanding market share. In 2020, domestic players still made up a relatively small share of total analog chips used in China. We believe the room for import substitution will be about Rmb49.5bn by 2025, implying ample room for growth of domestic players. In our view, 3Peak’s development of leading technologies is positioning it as a supplier to top-tier clients in the Chinese market. In overseas markets, it has made breakthroughs via highly competitive R&D investment strategies. We are optimistic that as an analog chip leader in China, 3Peak will be among the first to benefit from import substitution.
How do we differ from the market? We are more optimistic about the growth potential of the firm’s power management products and its expansion into downstream markets.
Potential catalysts: Faster-than-expected progress in development of power management products and acquisition of customers via existing industrial and auto businesses.
Valuation and recommendation
Our EPS forecast is Rmb5.36, 8.76 and 12.99 in 2021/20122/2023, a CAGR of 56%. The stock is trading at 21x 2026e P/E. We assign a TP of Rmb804.78, corresponding to 37x 2026e P/E and implying 29.5% upside. Initiate at OUTPERFORM.
Risks
Disappointing R&D; talent attrition; high concentration ratios of clients and suppliers; liquidity risks; trade friction.
【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。