Performance review
1H22 revenue and adjusted homing net profit meet our expectations
Innovative Qizhi announced 1H22 results: revenue 650 million yuan, year-on-year + 76.1%; gross profit reached 210 million, an increase of 81.8% over the same period last year; adjusted net loss was 60 million yuan, narrowed by 44.9% over the same period last year. Income and adjusted return net profit are in line with our expectations, resulting in strong demand in downstream manufacturing, finance and other industries.
Trend of development
The trend of digital transformation of the manufacturing industry is obvious, intelligent manufacturing blossoms at multiple points, and the company's performance has maintained rapid growth under the epidemic. The company is in 1H22: 1) Manufacturing revenue 340 million yuan, year-on-year + 83.8%, the company's manufacturing sector benefits from the high demeanor of the domestic intelligent manufacturing core track, automotive equipment / OLED panel semiconductor / iron and steel metallurgy / energy electricity / engineering and construction plate income 1.20.5 shock 0.40 pound 0.03 billion yuan, year-on-year + 61% shock 710% 2934% / 1095% 2005% 2) the income of the financial services industry is 220 million yuan, + 78% compared with the same period last year, maintaining rapid growth, of which the income of the banking industry is 150 million yuan, which is + 138% compared with the same period last year. 3) the income of other industries is 90 million yuan, + 48% compared with the same period last year, maintaining steady growth.
The income scale effect and the accumulation of technical assets bring about continuous efficiency improvement, and the company's gross profit margin continues to improve. The company's 1H22 gross profit margin is 31.9%, year-on-year + 1 ppt, mainly due to the economies of scale brought about by the increase in revenue scale and the reuse of technical assets accumulated on the AI platform to improve delivery efficiency. As of 1H22, the total number of technology assets of the company has reached 2156, and the reuse rate of technology assets has reached 96.3%. The company's 1H22 management / sales / R & D expense rates are 8.7%, 29.3% and 33.7%, respectively, compared with the same period last year. The reduction in management and sales expense rates is mainly due to the rapid growth of the company's income and dilution rate, while the cost control ability is strong. The cash flow of the company's 1H22 operating activities is-250 million yuan, mainly due to income growth taking up cash. As of 1H22, the company's cash and cash equivalents at the end of the period reached 1.64 billion yuan, with sufficient funds on hand.
With the advent of the era of Industrial 4. 0, innovative Wisdom continues to empower AI+ manufacturing. The company continues to build intelligent manufacturing system (AIMS) with MMOC technology platform as the core, carrying more and more AI products and solutions, and high-quality customers in the field of "AI+ manufacturing". By June 30, 2022, the company had applied for a total of 697 patents, of which invention patents accounted for about 90%. In addition, in the first half of the year, the company further improved the territory of "AI+ manufacturing" by investing a 51% stake in two companies, Chi Chi and Haoya Intelligence. In August, 2022, the company was awarded the fourth batch of national special new "Little Giants" that the company's efforts in the field of "AI+ manufacturing" were recognized by the state.
Profit forecast and valuation
As the company maintains strong profitability while its revenue is growing rapidly, we keep its revenue forecast unchanged and raise its net profit forecast after adjustment from-1.9 million to-1.2 billion to-90 million. We are optimistic about the broad prospects of smart manufacturing and maintain the industry rating of outperforming. Considering that the company's performance has maintained rapid growth during the epidemic, we have raised our target price by 33% to HK $28, corresponding to 8.8x 2022eP/S and 6.0x 2023e Pmax S, which is 37% higher than the current share price, which is currently trading at 6.4x 2022eP/S and 4.4x 2023e Pmax S.
Risk.
Industry competition intensifies; business continues to lose money; important customers lose; technology iteration is faster than corporate innovation.