The company released its semi-annual report for 2021: 2021H1's revenue and return net profit were respectively RMB 251max, an increase of 26.54% and 12.15% compared with the same period last year. At present, the company's network-connected products are affected by the decline in heavy truck sales, and short-term performance is under pressure. However, the company's intelligent products have made rapid breakthroughs in the front and rear areas at the same time, becoming a new fulcrum for the company's growth. We are optimistic about the rapid development of the company's intelligent products and vehicle network terminal business.

In the future, with the landing of the new standard of driving recorder, the unit price of the company's network-connected products may be significantly increased, which is expected to form a good support for the company's performance. We estimate that the return net profit of the company from 2021 to 2023 will be RMB 1.06 RMB 1.37 pm, respectively, and the corresponding EPS forecast will be RMB 1.67 pm 1.80 yuan respectively. Give the company 37 times PE in 2022, corresponding to the target price of 50.60 yuan, maintaining a "buy" rating.

Intelligent business income doubled, "front loading" + "rear loading" two-wheel drive. 2021H1, the intelligent business with the advanced driving assistance system as the core realized revenue of 51 million yuan, an increase of 103.54% over the same period last year.

1) pre-installed customers continue to make breakthroughs: in 2020, the company achieved a breakthrough in the business of pre-installed advanced driving assistance system for the first time.

In the same year, the pre-and post-installation market income of the advanced driving assistance system accounted for 53.7% and 46.3% respectively. So far in 2021, the company's pre-installed customers have continued to make breakthroughs, covering Sany, Shaanxi Automobile, Valin, BeiBen, Geely Commercial vehicles, Jinlong and other mainframe factories of slag trucks, cement mixers and other models.

2) the afterloading market position has been consolidated, and the market demand has increased rapidly: as of June 2021, more than 50 cities across the country have begun to install on-board terminal products, and the company has led and participated in more than 37, keeping its share in the lead. In the same period last year, due to the impact of the epidemic, the government's procurement of afterloading products slowed down, and market demand is recovering rapidly this year. At present, the company actively participates in the formulation of technical standards for intelligent network products of slag trucks in many cities in China, and provides a management platform for the construction of some cities, so as to enhance customer stickiness. At present, the company has been shortlisted in Guangdong, Henan, Jiangsu and other places of general heavy truck active safety product supplier catalogue, obtained the supply qualification, the company expects to start batch supply in the second half of the year.

The growth rate of network-connected business under short-term pressure slows down, and the long-term benefit unit price increases.

1) short-term: heavy truck sales decline, the company's performance in the second half of the year is under pressure. 2021H1, the company's intelligent enhanced driving system achieved business revenue of 157 million yuan, an increase of 17.95% over the same period last year. From January to March 2021, sales of heavy trucks nationwide reached 531600, an increase of 94 percent over the same period last year, breaking an all-time high. Since April, due to the faster-than-expected replacement progress of the standard models of the "sixth National" and the decline in the prosperity of the logistics industry, the sales of heavy trucks have cooled down. From April to July, the growth rate of heavy truck sales was 0.1%, 9.5%, 6.9%, 45.2%, respectively. Affected by this, the company's second-quarter results are under pressure. In 2021Q1-Q2, the company's revenue increased by 104% Maxime 12%, and the net profit of homecoming increased by 92% Maxim 21% respectively. Although heavy truck sales are currently showing a downward trend, a total of 1.121 million heavy trucks were sold nationwide from January to July, still achieving a year-on-year increase of 17.6%.

2) long-term: the new standard drives the increase in the unit price of commercial vehicle network products. We expect that the "New Standard for vehicle driving Recorder" will be introduced in the second half of 2021, which will add audio and video recording, protective memory, driver identification and other functions, and will enhance positioning requirements, and the unit price of driving recorder is expected to increase significantly. The company's network-connected business is expected to benefit from a long-term increase in the unit price of products.

Open up intelligent controller business and have a broad space for growth. In February 2021, the company established a joint venture Beijing Yubo Automotive Control system Co., Ltd., which is responsible for the product research and development of automobile controller. Beijing Weibo is mainly engaged in the R & D, production and sales of all kinds of controllers for commercial vehicles. At present, the main product types include DCM, BCM, seat controllers, gateways and so on. As of June 2021, Beijing Weibo has signed technology development agreements with a number of mainframe factories to supply Sinotruk, and its share is expected to continue to increase. At present, Beijing Weibo focuses on the field of intelligent controller for commercial vehicles, and the business is expected to open up a new space for revenue growth.

Risk factors: the risk of further decline in heavy truck sales; the risk of raw material shortage and price increase; the implementation of policies related to driving recorder is not as expected; the risk of decline in gross profit margin of the company's products; and the risk that the expansion of new customers of the company's intelligent products is not as expected.

Investment suggestion: the company will seize the development opportunity of intelligent products, make rapid breakthroughs in the field of front and rear loading of intelligent products, and achieve rapid growth in performance. Although the current domestic heavy truck sales decline, the company's networked products are growing or under pressure, but with the landing of the new standard for vehicle driving recorders, the company is expected to benefit from the increase in the unit price of networked products for a long time. In addition, the company also has broad growth opportunities in the field of vehicle networking terminals, man-machine exchange terminals, smart cities and intelligent controllers for commercial vehicles. Taking into account the current fluctuation of domestic heavy truck sales and the rapid growth of the company's intelligent business, we adjust the company's home net profit forecast for 2021-2022 to 1.06 shock 1.37 (originally 1.87 million yuan), adding 181 million yuan to the 2023 forecast, corresponding to the EPS forecast of 1.06 shock 1.80 yuan respectively. With reference to the valuation of comparable companies in the same industry, and considering that the company is still in a period of rapid growth, the company is given 37 times PE in 2022, corresponding to the target price of 50.60 yuan, maintaining a "buy" rating.