NVIDIA RTX 50 series demand surges, Baoneng Group may become a core beneficiary

According to Zhitong Finance APP, recently, NVIDIA's (NVDA.US) new generation GeForce RTX 50 series graphics cards have been extremely popular, with market demand far exceeding supply, and the retail price significantly exceeding the official guidance price by up to 50%. Notably, as NVIDIA's core AIC partner, Biostar Group (01263) has re-entered the high-end RTX 5090 product market this year. Currently, the channel price for RTX 5090 can reach over $3,000, maintaining a high premium. GF Securities believes that Biostar Group's current valuation is at a low level, and with the ramp-up of the RTX 50 series and the advancement of server business, the company's performance and valuation both have upward potential, and it is expected to become a core beneficiary of this round of demand explosion. It is reported that NVIDIA's RTX 5090 and RTX 5080 graphics cards have significantly improved technically compared to the previous generation products. The RTX 5090 features the latest Ada Lovelace architecture, offering higher graphics processing capabilities and faster refresh rates. Its GPU core supports ultra-high resolutions, performing excellently not only in gaming scenarios but also possessing strong application potential in graphic rendering and artificial intelligence inference. The VRAM of the graphics card has been increased to 24GB, combined with advanced ray tracing technology, achieving unprecedented levels of game graphics quality and smoothness. In recent years, the shortage of graphics cards has become increasingly severe, forcing many consumers to face high secondary market costs when searching for high-end graphics cards. Taking the flagship model RTX 5090 as an example, the official suggested retail price is $1,999, but the actual market transaction price has exceeded $2,999, with some channels even higher. In terms of shipment volume, GF Securities estimates that the shipment volume of the RTX 50 series graphics cards will reach 35-40 million units in 2025, an increase of over 30% compared to the previous generation RTX 40 series (25-30 million units shipped in 2024). Public information shows that Biostar Group is the world's second-largest GPU graphics card manufacturer, primarily engaged in the design, development, and manufacturing of graphics display cards, while providing product manufacturing services for well-known computer brands worldwide. The company's Zotac brand is a core AIC partner of NVIDIA globally. Biostar Group previously announced its 2024 annual financial report, indicating that the group's total revenue for 2024 was 10.082 billion yuan, an increase of 10% year-on-year; the net profit for the year was 262 million yuan, a year-on-year increase of 331%, with earnings per share of 0.68 yuan. The final dividend was 0.15 yuan, compared to 0.20 yuan in the same period last year. The profit growth was mainly due to strong demand for the new series of graphics display cards launched at the beginning of 2024, along with improved demand for graphics display cards compared to the previous year, and a reduction in promotional and marketing expenses for the group's own brand business to stimulate sales, leading to an improvement in gross profit margin. According to GF Securities' calculations, assuming that the RTX 5090 accounts for 5% of the total shipment volume of the RTX 50 series (approximately 1.75-2 million units), and Biostar Group's market share reaches 12.5% (Biostar Group accounts for 1/8 among 8 major AIC manufacturers), with a net profit of approximately 300 yuan per card, the company could contribute approximately HKD 512 million in net profit from the RTX 5090 business alone, nearly a 200% increase compared to the total net profit for 2024 (HKD 262 million) In addition to graphics card OEM, BiNeng Group has recently reached a cooperation with global server giant Supermicro (SMCI.US) and has begun to enter the supply chain of Chinese cloud service providers. The server business is expected to become a new growth point. Furthermore, BiNeng Group's current stock price corresponds to a PE of only 4 times for 2025, which is far lower than its peers ASUS (12 times) and MSI (13 times), and also lower than its own historical average PE (7.5 times), indicating significant room for valuation recovery