Deep ploughing smart city for 20 years, "self-driving + AIoT" to promote business model transformation company was established in 2001, 20 years deep ploughing smart city field. In December 2021, the company announced that it will launch a L4-level smart grid car with "self-driving + AIoT" technology as the core, ushering in an important change in the business model. From 2007 to 2020, the compound growth rate of income exceeded 30%; the level of operating net cash flow continued to improve, which was higher than the net profit level for three consecutive years.
With the transformation of smart cities from construction to operation, the digital base is expected to become an important basis for seizing operational opportunities, according to IDC data, the market expenditure of smart cities in China reached US $26.6 billion in 2020, is expected to exceed US $40 billion by 2023, and the compound growth rate from 2020 to 2023 is more than 15%. However, from the perspective of demand structure, under the guidance of policies such as "digital China", the focus of smart cities has shifted from construction to operation. Under the general trend, the importance of urban digital base is highlighted, and companies with profound accumulation are expected to gain a foothold on the digital base and grasp more upper-level operation opportunities.
The city digital base has the advantage, and the smart pipeline is expected to benefit from the policy to promote the traditional field: the company has ploughed the grid management field for 20 years and is the leader in the grid management field in our country. The company has covered more than 200 prefecture-level cities and more than 1000 county-level cities and counties, and set up urban operation data service branches in more than 100 cities, and many projects have been in service for more than ten years, laying an important foundation for layout and operation. Emerging areas: policy promotion, smart pipelines and other businesses ushered in development opportunities. "moderately advanced infrastructure investment" was written into the document of the Central Economic work Conference, and the demand for the renewal and renovation of urban pipelines is expected to continue to be released. The company has accumulated hundreds of projects and is expected to benefit from industry trends. At the same time, actively layout GIS and other new technologies, combined with business to produce new vitality.
"L4 self-driving + operation" promotes the transformation of the model to SaaS, and opens a new chapter in the development of "L4 self-driving + operation" to promote the company's transformation from project system to SaaS mode. The company is about to launch L4 smart driving car for urban operations, the business model has begun to change to annual payment, pay according to workload and other ways, with the potential for SaaS transformation. At the same time, L4 self-driving is also expected to help optimize labor costs. Calculation of the future space of the company's operating business: the company's annual conservative / neutral / optimistic demand is estimated to reach 20x43 / 8.2 billion yuan, and the expansion of operating business will open up a new space for the company's growth.
The investment suggestion company has achieved a high share in the smart city field, and the digital base capability has become an important foundation for the transformation; in the future, we plan to launch "L4 self-driving + operation", which will change the mode to SaaS, and is expected to usher in a double rise in performance and valuation, opening a new chapter in development. It is estimated that from 2021 to 2023, the EPS is 0.42, 0.51, and the corresponding PE is 32X, 26X, 21X. IFLYTEK, Donghua Software, Taiji shares, Jiadu Technology and Lopter are selected as comparable companies. The average PE of related companies from 2021 to 2023 is 40X, 29x, 23x. The company has valuation advantage, covering it for the first time and giving it a "recommended" rating.
Risk hints: the company's new technology is not as advanced as expected; the impact of the epidemic is uncertain; industry competition is intensified.
