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当虹科技(688039):三季度复苏强劲 传统&创新业务齐头并进

Danghong Technology (688039): Strong recovery in the third quarter, traditional & innovative businesses went hand in hand

中信證券 ·  Oct 31, 2022 20:52  · Researches

The company's media and culture business performed well in the first three quarters, and delayed projects landed one after another. With the country attaching great importance to publicity and cultural work, strengthening technology investment in radio and television, and actively embracing emerging technologies in the Internet video field, we expect the company's business growth to continue. According to our research, since the third quarter, the company's overall performance recovery is ideal, order execution is intensive, and business is expected to continue to recover in the fourth quarter. Maintain a "buy" rating.

Matters: the company released its three-quarter report in 2022, with revenue of 253 million yuan in the first three quarters, an increase of 31.86% over the same period last year; net profit of-41 million yuan, a decrease of 413.24% over the same period last year; and deduction of non-return net profit of-45 million yuan, a decrease of 1,391.71% over the same period last year.

Media culture business performance is outstanding, around the media, vehicles continue to invest in research and development. From a quarterly point of view, 2022Q1-Q3, the company realized revenue of 0.68 million yuan respectively, representing a year-on-year change of 10.16%, 68.36% and 216.82%, respectively. Q2 revenue is obviously affected by local epidemic situation, and Q3 revenue has been significantly improved compared with the same period last year and month-on-month, which we believe is related to media culture business orders, especially the intensive receipt of overseas orders; pan-security business revenue is relatively under pressure. with the alleviation of hardware supply and the acceleration of channel coverage, we judge that the relevant market opportunities are still broad. The company's comprehensive gross profit margin in the first three quarters was 26.95%, which has been adjusted compared with the previous level, which is mainly related to the rise in procurement costs. in addition, the company's early gross profit margin for new products is low, and the gross profit margin is expected to recover after the product is mature. On the expense side, in the first three quarters, the company's sales / management / R & D expenses were 0.22 trillion yuan, respectively, with a year-on-year change of-4.89%, 22.31%, 20.04%. At the same time of controlling the sales and management expenses, the company has increased its investment in the media and vehicle fields. as of June 30, 2022, the company's R & D personnel has increased to 269.

The traditional business has a strong momentum, and the construction of media culture has been promoted in depth. Media culture is the core business of the company. On the one hand, with the state attaching great importance to propaganda, ideological and cultural work, technical investment in the field of radio and television is expected to be consolidated.

In June 2022, the State Administration of Radio, Film and Television issued a document requiring that standard definition channels be basically closed by the end of 2025, high-definition television has become the basic broadcasting mode of television, and ultra-high-definition television channels and program supply have formed a scale; recently, the Central Radio and Television head Office stressed the need to "strive to build a new type of international first-class mainstream media with strong attraction, communication power and influence". On the other hand, innovative technologies emerge one after another, and the Internet video field actively embraces change. Innovative products represented by XR studio and AR platform live broadcast system have gradually landed. In addition, as one of the few high-tech enterprises with independent research and development capabilities of high-end products in the domestic video transcoding software market, the company actively participated in going out to sea, in addition to the Arab Qatar project, according to the investor relations activity record table released by the company on August 26, 2022, the company also signed other overseas orders in the first half of this year.

The potential of innovative business is huge, and the prospect of intelligent network connection in the field of automobile is promising. On the basis of the long-term accumulation of media culture, pan-security business and video underlying technology, the company has developed the business direction of Intelligent Networked Automotive Entertainment cockpit, and is committed to creating a "new entertainment, new office" scene. Related products include: cockpit multi-screen linkage to achieve digital content frame-level synchronous transmission, playback and linkage cross-screen operation; cockpit immersive atmosphere, transfer of physical hardware and video content linkage. The company's video streaming team has accumulated deep technology in video frame-level processing, multi-screen synchronization, streaming video playback, video ultra-low delay, immersive atmosphere expression and other technologies, and we expect related products to have a certain competitive advantage. At present, the company has covered a number of car customers, related products are expected to become a new growth point. In May 2022, the company completed its investment in Zhejiang Prism holographic Technology Co., Ltd., which is the first holographic display Tier1 supplier in the world to reach the vehicle specification level of mass production standards, and is expected to consolidate the company's full-stack overall solution capability.

Risk factors: policies related to high-definition and ultra-high-definition television are not as expected; the company's new business development is not as expected; local epidemic affects the company's project implementation and downstream budget.

Earnings forecast, valuation and rating: the company focused on confirming large overseas orders in the third quarter, and we expect the media business to maintain a good momentum of development in the fourth quarter. Adjust the company's revenue forecast for 2022-24 to 6.85 / 865 million yuan (the original forecast is 5.04 pounds), taking into account the relative pressure on the company's gross profit margin this year and sustained R & D investment. Adjust the company's 2022-24 net profit forecast to 0.71 million yuan (0.77 billion), with reference to comparable Digital Video and Hongsoft Technology's average 2023 valuation of 41 times PE, giving the company a 2023 target market capitalization of 3.9 billion yuan, corresponding to 2023 41XPE, corresponding to a target price of 48 yuan, maintaining a "buy" rating.

The translation is provided by third-party software.


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