The company's revenue grew faster than expected in the first half of the year. In the first half of 2022, the company reached 646 million yuan, an increase of 76% over the same period last year (54% in the same period last year). In terms of gross margin, the company continued to improve, with a year-on-year increase of 82% and a gross margin of 32%, an increase of 1 percentage point. In terms of net loss, the company narrowed significantly, and the adjusted net loss rate increased to-9% (compared with-17% in the same period last year), narrowing by 45%. Throughout the year, we expect the company to continue to maintain a strong growth momentum, with revenue growth of more than 80%, gross profit margin of about 33%, adjusted net loss absolute value to continue to narrow, and adjusted net loss rate to remain within-9%.
Manufacturing and financial lines continue to advance by leaps and bounds. In the first half of this year, the company overcame the impact of the epidemic and continued to grow by leaps and bounds in the manufacturing and financial sectors, with manufacturing revenue growing by 84%, accounting for 52% (compared with 50% in the same period last year), and financial revenue up 78%. In the relevant report released by IDC this year, the company entered the top four positions of computer vision and machine learning at the same time for the first time. The strategic policy of AI engineering / scene landing continues to enable AI+ manufacturing + financial rapid growth, effectively solving industry demand and pain points, fully representing a long-term, benign and sustainable strong realization path of to B application from point to line and then to surface.
According to the data of the National Bureau of Statistics, despite the rebound of COVID-19 's epidemic, the added value of the manufacturing industry above scale increased by 2.8 percent in the first half of 2022 compared with the same period last year, and the proportion of manufacturing added value in GDP reached 28.8 percent, an increase of 1.4 percentage points over 2021. The manufacturing industry has strong resilience and incremental scale in the Chinese market, but the overall penetration of the AI enabling manufacturing industry is still at a low level, and the manufacturing industry chain is far more complex than other industries, with more emphasis on the enabler's deep understanding of the industry background, so the manufacturing AI enabling threshold is higher and more difficult than other industries, and the corresponding value increment will be greater, while the company has been working hard in the AI+ manufacturing field for many years. Has a strong competitive advantage of differentiation. Therefore, we believe that the company's unique AI enabling path will maintain rapid growth in the next few years, and will have a very huge market scale and growth space in a long period of time.
Investment advice. In 2022, the average PS of comparable companies was 11 times, the average PS of Chinese companies in 2022 was 12 times, the highest PS of Cambrian was 23 times, and the PS of Shangtang has dropped to 12 times. The growth rate of innovative Qizhi is much higher than that of other companies.
We forecast that the company's operating income in 2022-2024 will be RMB3.996 billion (unadjusted) respectively, and the revenue CAGR for the period 2021-2024 will be 67%. Taking into account the revenue growth, gross profit margin, industry position, and the differentiated competitive advantage of the company and the comparable company, we give Innovation Qizhi 11.5 times PS (+ 15.00%) in 2022, then the target market capitalization is 17.839 billion yuan (+ 15.00%), calculated according to 559.3 million total equity. The target price is 31.90 yuan per share (+ 15.00%) (corresponding to 36.31 Hong Kong dollars per share), maintaining a "better than the market" rating.
Risk hint. The slowdown in the company's manufacturing sector affects the overall income growth, the intensification of competition in the industrial quality inspection sector leads to a lower-than-expected increase in revenue growth and gross profit margin, and overseas restrictions affect the relevant market valuation.