China Listed Companies Network/Article

On the evening of November 13, 2024, Yutai Micro (688515) announced that the company received Industrial Securities Co., Ltd., Aijian Securities Co., Ltd., Shanghai Genxi Private Equity Fund Management Co., Ltd. and other institutions for investigation on November 12 and 13.

The market size of domestic operators' access networks continues to expand

According to the economic operation of the communications industry in the first three quarters of 2024 released by the Ministry of Industry and Information Technology, the construction of new infrastructure is proceeding in an orderly manner, the scale of users such as 5G, gigabit networks, and the Internet of Things continues to expand, the mobile Internet access traffic maintains rapid growth, and the scale of fixed broadband access users grows steadily, with the number of gigabit users approaching 200 million. As of the end of September, the total number of fixed Internet broadband access users of the three basic telecommunications enterprises reached 666 million, a net increase of 29.55 million from the end of the previous year. Among them, 631 million fixed Internet broadband access users with access rates of 100 Mbps and above reached 631 million, accounting for 94.7% of the total number of users; The number of fixed Internet broadband access users with access rates of 1,000 Mbps and above reached 196 million, a net increase of 32.73 million over the end of the previous year, accounting for 29.4% of the total number of users, an increase of 3.7 percentage points from the end of the previous year.

As of the end of September, the number of Internet broadband access ports nationwide reached 1.194 billion, a net increase of 57.78 million over the end of the previous year. The number of 10G PON ports with gigabit network service capabilities reached 27.32 million, a net increase of 4.299 million from the end of the previous year, and the penetration rate of gigabit users in various regions continued to increase. As of the end of September, the penetration rates of fixed broadband access of 1,000 Mbps and above in the eastern, central, western and northeastern regions were 30.1%, 29.9%, 29.8% and 21.6%, respectively. The penetration rates of broadband access users with access rates of 1,000Mbps and above in the Beijing-Tianjin-Hebei region and the Yangtze River Delta region were 31.2% and 29.2% respectively, up 0.6 and 0.2 percentage points respectively from the previous month.

Typically, each port corresponds to an Ethernet PHY chip. Yutai Micro's Gigabit Ethernet physical layer chips that have been mass-produced can be used for Internet broadband access ports of domestic operators. With the growth of the number of broadband users and the increase in broadband access rate, the market size is expected to further expand.

At the same time, Yutai Micro's 2.5G Ethernet physical layer chip will be launched at the end of 2022 as a new product, and the revenue of this product will reach 20.8592 million yuan in 2023. As of the first three quarters of 2024, the company's 2.5G Ethernet physical layer chip revenue reached 87.052 million yuan, an increase of 317.33% over the annual revenue of 2023. With the advancement of urban digitalization, the bandwidth speed of application scenarios such as WiFi, 5G, and optical fiber has exceeded the gigabit level, and there is a trend of further speed-up, which puts forward higher bandwidth requirements for the Ethernet ports supporting related products. The application of 2.5G Ethernet port in WIFI6/7 routers, high-end computers, home fiber broadband access and other equipment is growing rapidly. The product has won the "China IC Billboard Annual Excellent Product Innovation Award". Looking ahead, the product will continue to increase in volume and make further contributions to the company's revenue.

The path of increasing R&D investment and re-entering the track of accelerated growth

In terms of achieving revenue growth of major products for 7 consecutive quarters and achieving a single-quarter revenue peak, Yutai Micro said that this is mainly due to the company's timely adjustment of the overall strategy and the path of increasing R&D investment after experiencing the impact of the industry downward cycle in 2023. At present, the company is involved in a total of seven product lines. Among them, Netcom Ethernet physical layer chips, Netcom Ethernet switch chips (mainly integrated products) and Netcom Ethernet network card chips, these fields are relatively scarce, and the core R&D idea is to accelerate the process of domestic substitution; The core R&D idea is to connect the huge domestic application scenarios, in order to quickly realize the application landing and gradually achieve transcendence; As an emerging competitive field in China, the core R&D idea of vehicle video transmission chip is to meet the largest and most important market demand. In the first three quarters of 2024, the total revenue of these seven new products accounted for 44.99% of the total revenue of all categories of chip products, an increase of 167.80% compared with the total revenue of the seven new products in 2023.

In addition, due to the capacity crunch in previous years, the capacity has been saturated in recent years. In 2023, in view of the high inventory level of the client, it will have a great impact on the company's industrial-grade products, resulting in a 56.95% decrease in the revenue of industrial-grade chips in 2023 compared with 2022. However, in the first three quarters of 2024, the company's revenue from industrial-grade products increased by 120.40% year-on-year compared with the same period in 2023, the revenue of commercial-grade products increased by 54.26% year-on-year, and the revenue of vehicle-grade products increased by 129.07% year-on-year. The company has successfully crossed the trough period of the industry and re-entered the track of accelerated growth.

At the same time, Yutai Micro Company introduced the "2024 Restricted Stock Incentive Plan (Draft)", which mentions the company-level performance appraisal, and the assessment year is three fiscal years from 2024 to 2026, which is divided into three assessment periods, and an assessment is conducted in each fiscal year. From the perspective of revenue indicators, the company has set the growth rate of operating income as one of the assessment indicators, and it is estimated and calculated based on 2023.

In terms of incentive trigger value, the incentive trigger value for revenue in 2024 is set at 356 million yuan, 462 million yuan in 2025, and 601 million yuan in 2026. In terms of incentive target, the target value of revenue in 2024 is 383 million yuan, 536 million yuan in 2025, and 751 million yuan in 2026. (The above data is an estimate based on this table.) The equity incentive plan reflects the company's confidence in its own development and long-term incentives for employees, and aims to motivate the company to take the interests of investors as the foundation, take the company's long-term compliance development as the core, continue to work hard, and constantly make new breakthroughs.

Finally, Yutai Micro emphasized that investor relations management is a key area in the company's capital market. The company is committed to bridging the information gap with investors and treating all investors fairly. The company also expects to understand the expectations and needs of investors and provide them with feedback on the company's considerations and actions. In addition, the company has set an industry model by strengthening compliance operations and internal controls through investor supervision. The company also has a wide range of industry information to ensure that its product roadmap is in sync with industry developments and enhances its business growth potential. In conclusion, the company will continue to strengthen investor relations management to maximize investor benefits.