事件：公司发布2022年年度报告。公司2022年度实现营业收入83.30亿元，同比下降14.55%，实现归属于母公司所有者的净利润为0.73亿元，同比下降92.81%。22Q4实现归母净利润-1.37亿，环比增长15.2%。 

Moving on from 2022 weakness; bullish about 2023E cyclicity on a consumer demand recovery, while data tech innovations drive enterprise demand

2022 results: Longsys Electronics posted revenue of RMB8.33bn in 2022, down 14.55% yoy, and net profit of RMB73m, down 92.81% yoy, which included a 22Q4 net loss of RMB137m, improving 15.2% qoq.

点评：2023年存储单价有望止跌回升，行业拐点或已现，预期公司顺周期弹性大。根据公司年报，2022年度公司业绩大幅下滑主因1）存储芯片行业整体承压带来的不利影响。2）对存在减值迹象的存货计提的存货跌价准备 1.62 亿元，确认资产减值损失较 2021 年同比大幅增加。3）2021年度业绩基数较高。进入 2023 年，存储芯片单位价格的下滑趋势已开始有所缓解, 依据 CFM 数据，2023 年全球半导体存储的单价有望终结下跌趋势，并可能实现小幅回升。预计价格见底后，公司23年业绩有望逐季度改善，库存有望好转，看好23年周期+消费需求复苏叠加信创催化企业级需求下，公司企业级产品推出享受信创及ChatGPT市场红利、Lexar新产品持续推出+高端消费品牌价值不断彰显驱动公司23年业绩高增。品牌叠加成长性突出，持续坚定推荐！

2023E outlook: we expect storage unit price declines to turn around as an industry inflection point emerges. We believe Longsys would demonstrate high pro-cyclical elasticity. Its annual report attributes the sharp 2022 decline to three factors: (1) macro pressure on the memory chip industry; (2) RMB162m impairment provisions with heavier asset impairment recognition than in 2021; and (3) 2021 was a high base. Memory chip unit prices have started to soften with the start of 2023. And CFM data indicates the global semiconductor storage unit price downtrend would level off and show a modest recovery in 2023E. We expect Longsys will perform better quarter by quarter when prices bottom out and inventory improves this year. We are bullish about 2023E cyclicity on a consumer demand recovery, while data tech innovations drive enterprise demand. Longsys’ enterprise product launches could benefit from market growth on data tech innovations and ChatGPT applications. In addition, Lexar’s new product launches and premium consumer brand value could drive 2023E performance growth at Longsys. 

国际领先的综合性半导体存储龙头，Lexar+Foresee品牌价值不断彰显。江波龙主要从事Flash及DRAM存储器研发、设计和销售，提供消费级、工规级、车规级存储器及行业存储软硬件应用解决方案。公司自主培育品牌FORESEE面向工业市场ToB+收购Lexar开拓消费类ToC存储高端市场，品牌收入结构不断优化，聚焦行业应用与高端消费市场。除自有品牌FORESEE外，公司2017年将Lexar纳入版图，Lexar聚焦高端消费，是公司拓展海外市场的重要制程。2021年1-9月公司移动存储产品存储卡全球市场份额位列Top2，2020年嵌入式存储产品eMMC市场份额位列全球第七。公司依托Lexar品牌聚焦高端消费类市场，2019 年至 2021 年，Lexar在存储卡以及闪存盘领域均排名全球第三。

Global semiconductor storage leader: Lexar-Foresee brand stack drives growth

We like the Longsys brand stack’s high-growth potential and highly recommend the stock. Longsys covers R&D, design and sales of flash and DRAM memory products, and provides consumer-grade, industrial-grade and automotive-grade storage as well as industrial storage software and hardware application solutions. In addition to its proprietary Foresee brand, which targets the B2B enterprise market, it acquired Lexar to enter the B2C premium consumer storage market. Longsys is upgrading its revenue mix with a dual focus on industrial and consumer applications. Lexar came on board in 2017 with its premium consumer focus, providing Longsys with key leverage to expand into foreign markets. Over Jan-Sep 2021, it had the second-largest share of the global mobile memory card market, and in 2020, it placed seventh in the eMMC market. Lexar placed third globally for both memory cards and flash drives in 2019-21.

整体存储需求转折契机点将近，终端及品牌有望率先复苏，看好顺周期下公司高业绩高弹性。库存方面，估计2022Q3 库存接近最高点，江波龙库存Q3上涨还有汇率贬值原因导致。2022年度公司对存在减值迹象的存货计提存货跌价准备 1.62 亿元，确认资产减值损失较 2021 年同比大幅增加，CFM预期2023年价格止跌回升，当前或已利空出尽。同时复盘2020Q1-2022Q3 PC OEM、DRAM模组厂、分销商及DRAM颗粒制造商库存周转周数来看，模组厂和OEM厂商的终端成品库存和品牌的库存安全性更高，终端库存水位下降，预计周期复苏以江波龙为例的终端产品弹性较大。估值方面，目前存储器板块估值仍处历史相对低位。供需方面，根据TrendForce预测，23H2或为整体存储需求转折契机点，行业困境有望反转。依据 CFM 数据，美光、SK 海力士均宣布减少产出以及降低投资，三星虽未宣布减少产出但亦有降低投资的计划。全球主要存储晶圆原厂的收缩行动预期将于 2023 年有效改善行业目前供大于求的现状，库存压力与价格跌幅有望收敛，历史经验看存储行业股价在资本开支调整时见底，比盈利好转提前 2-3 个季度，顺周期弹性大。2021年公司实现营业收入97.49亿元，归母净利润10.13亿元，分别实现同比+34%/+266.73%。伴随存储产业逐步复苏看好23年公司业绩保持高增长动能，千亿美金存储市场中公司份额有望不断提升，收入利润有望长期持续增长。

Imminent storage demand inflection point, starting with end-markets and brands; we like Longsys’ high-growth prospects due to its pro-cyclical elasticity 

Inventory: we believe inventory level was close to the peak in 22Q3, partly due to FX depreciation. The company made inventory impairment provisions of RMB162m in 2022, leading to much heavier asset impairment recognition than in 2021. CFM expects prices to stop falling and recover in 2023E as bearish news flow might fizzle out. We looked at inventory turnover weekly cycles of PC OEMs, DRAM module makers, distributors and DRAM particle manufacturers over 20Q1-22Q3. Among module makers and OEMs, we found that end-product inventories and brands have higher inventory security. As end-market inventories decline, end-product players like Longsys with higher elasticity could see a cyclical recovery. Furthermore, memory sector valuations are currently low vs historical levels. 

Supply and demand: TrendForce predicts 23H2E could bring relief and a turning point for the industry in terms of storage demand. Micron and SK Hynix have announced output reductions and investment reductions, according to CFM; while Samsung has not announced output reductions but plans to reduce investment. Supply curbs by major global storage wafer fabs in 2023 would effectively rebalance the industry’s current supply excess, converging inventory pressure and the price downtrend. History shows that storage share prices bottom out when the industry makes capex adjustments, 2-3 quarters before earnings improve, reflecting pro-cyclical elasticity. Longsys posted a yoy revenue increase of 34% to RMB9.75bn in 2021, with net profit up 266.73% to RMB1.01bn. As the storage industry gradually recovers, we expect the company will maintain its high-growth momentum 2023E. We believe its share of the global USD100bn storage market will expand, along with revenue and profit growth in the long term.

看好高端消费品牌Lexar品牌价值不断彰显，根据Omida 数据，2019 年至 2021 年，Lexar在存储卡以及闪存盘领域均排名全球第三，目前拓展到SSD和DDR全品类，具有很强的海外认知度，可类比安踏李宁，有强消费品属性及高成长动能。自2017年纳入版图以来，Lexar销售额已从2018年的 4.06 亿增长到2021年的17.08亿人民币，体现出江波龙收购其后的卓越整合能力，其未来空间可对标同行SanDisk，15年出售给WD时估值约190亿美金。远期来看，江波龙着眼布局电竞业务作为Lexar新增长发力点。2022 年，Lexar（雷克沙）品牌的高端摄影卡持续增长。2021年10月，Lexar的内存推出了行业领先的 DDR 5 产品战神系列，提供了不同规格的频速进行选择。伴随近期Intel、AMD发布新一代CPU支持DDR5标准，有望看到DDR需求向上拐点。根据TrendForce2023年初预计，到2023Q4，DDR5在PC/手机端渗透率将达23%/30%。22年11月Lexar推出NM710固态硬盘，支持电竞稳定存储、快速读写和强续航的存储需求。

Longsys springboards Lexar’s premium consumer brand to new heights

Growth spurt after integration: Lexar was the third largest player in the global memory card and flash drive market from 2019 to 2021, based on Omida data. It has since expanded its product matrix to all SSD and DDR categories. Like Anta and Li Ning, it enjoys global recognition for its strong consumer products and high growth. As a testament to Longsys’ excellent integration skills, Lexar’s sales grew from RMB406m in 2018 to RMB1.708bn in 2021 after becoming part of Longsys in 2017. Lexar-branded high-end camera cards continued to grow in 2022. We regard Lexar’s future growth prospects as akin to peer SanDisk, which was valued at about USD19bn when it was sold to WD in 2015.

Targeting e-sports: Longsys has long-term plans to deploy the e-sports business to spur new growth for Lexar. Lexar launched its industry-leading DDR5 Ares memory series with different frequency speed options in October 2021. With Intel and AMD launching next-gen CPUs that support the DDR5 standard recently, we expect to see a growth inflection point in DDR demand in the future. Earlier this year, TrendForce projected that DDR5 penetration rates on PCs/mobile phones will reach 23%/30% by 23Q4E. Targeting the gaming market, Lexar also launched the NM710 solid-state drive (SSD) in November 2022, which offers gaming essentials like stable storage, fast read and write, and a long battery life.

ChatGPT不断迭代，数据存力作为算力的进阶需求迭起，我国存算投资比例明显失衡，看好国产存储器空间广阔，公司业绩有望受益提升。ChatGPT是大数据+大模型+大算力的产物，每一代GPT模型的参数量高速增长，根据人工智能学家公众号数据，2019年2月发布的GPT-2参数量为15亿，2020年5月发布的ChatGPT的前身GPT-3，其参数量达到了1750亿。ChatGPT3相较ChatGPT 2在数据存储端从百G提升至40T在存储量上有约100倍的提升。GPT-4拥有多模态能力，可以接受图像输入并理解图像内容，可接受的文字输入长度也增加到3.2万个token（约2.4万单词）。OpenAI总裁称，公司正在测试的GPT-4高级版本，是普通GPT-4储存内容能力的5倍。与算力聚焦在“算”不同，数据存力是数据生产要素处理的综合能力体现，当存储效率低的时候，算力很难发挥作用。当前我国存算投资比例相比美国、西欧明显失衡，存储或将成为经济发展特别是高算力领域的短板, 公司业绩有望受益提升。

ChatGPT drives demand capacity for iterative advanced computing power storage 

As there is a clear imbalance between storage and computing power investments in China, we see enormous growth potential for the storage market and expect Longsys to grow alongside the market. ChatGPT involves big data, large models and enormous computing power, where the number of parameters rise exponentially for each successive generation of GPT. Based on AI scientists WeChat official account, GPT-2 was released in February 2019 with 1.5bn parameters and GPT-3, the predecessor of ChatGPT, was released in May 2020 with 175bn parameters. From GPT-2 to GPT-3, data storage capacity increased about 100x from 100GB to 40TB. GPT-4, released in March 2023, has multimodal capabilities in that it processes both text and image inputs, with its maximum text input length increased to 32,000 tokens (about 24,000 words). OpenAI President Greg Brockman said it is testing an advanced version of GPT-4 with 5x the storage capacity of GPT-4. While the keyword in computing power is “compute”, the key to data storage capacity is the comprehensive ability to process data for output. It would be difficult to employ computing power if storage is inefficient. Relative to the US and western Europe, China has a skewed investment ratio between storage and computing power. Since the lack of storage could hamper China’s economic development, especially in relation to advanced computing power, Longsys stands to gain alongside the growth of the storage industry. 

中国企业级固态硬盘市场份额亟待提升，信创将带来服务器存储器国产化趋势，公司企业级DDR4 RDIMM及SSD高端存储产品发布。2021 年英特尔、三星、美光等国际存储原厂占中国企业级 SSD 市场份额合计超过 70%，居主导地位。随着国家对数据安全自主可控的重视程度不断增加，存储器作为数据存储的直接载体，其对于数据安全可控战略的落地及实现具有关键作用。以《工业和信息化部等十六部门关于促进数据安全产业发展的指导意见》为代表的相关国家政策的落地意味着国内企业级 SSD 厂商将迎来更广阔的发展空间。22年末江波龙正式发布两款企业级SSD，分别是支持PCIe 4.0的Longsys ORCA 4836系列NVMe SSD与Longsys UNCIA 3836系列SATA 3.2 SSD，分别面向企业级读写密集型和混合型应用场景和从系统启动盘至大容量数据盘需求，跨出企业级SSD高端存储领域的第一步。2023年3月份，江波龙发布Longsys AQUILA系列32GB 2R×4规格 DDR4 RDIMM企业级专用内存条，标志着公司DIMM存储事业再上一台阶。

Urgent for China to raise enterprise SSD market share; data tech innovations drive server storage substitution; Longsys set for DDR4 RDIMM, premium SSD launches

The Chinese enterprise SSD market is dominated by global storage producers and the likes of Intel, Samsung and Micron collectively hold more than 70% of the market as of 2021. As China increasingly prioritizes independent and controllable data security, memory products, as a direct carrier of data storage, has a key role in the implementation and realization of its controllable data security strategy. The implementation of policy as espoused in the document, Guidance on Promoting the Development of the Data Security Industry by 16 Departments including the Ministry of Industry and Information Technology, would expand the growth potential of Chinese enterprise SSD producers. Longsys launched two enterprise SSD products at the end of 2022, Longsys ORCA 4836 series NVMe SSD, which supports PCIe 4.0, and Longsys UNCIA 3836 series SATA 3.2 SSD. Providing intensive enterprise read-and-write and mixed application scenarios and covering from system boot disks to large-capacity data disks, the products are a first in Chinese premium enterprise SSD storage. Longsys released the Aquila series of 32GB 2R×4 DDR4 RDIMM dedicated memory modules for the enterprise market in March 2023, marking a new standard for its DIMM storage business.