[Matters]

On April 12, Guangting Information released the 2023 Restricted Stock Incentive Plan (draft). The total number of restricted shares to be granted to incentive targets is 1,815 million shares, accounting for about 1.96% of the company's total share capital when the draft incentive plan was announced. The award price for restricted shares granted for the first time under the incentive plan is $26.93 per share. Company-level performance assessment target A is revenue of no less than 714.843 million yuan for 2023-2024 or no less than 30%/40% increase in net profit compared to 2022, target B is revenue of no less than 67/757 million yuan for 2023-2024 or an increase of 20%/30% over 2022 net profit. The company-level ownership ratio is determined based on the completion of the company's performance.

[Comment]

Equity incentives demonstrate confidence that the company's performance will grow. Judging from the incentive targets, this equity incentive covers a total of 57 people, including company directors, senior managers, and core technical cadres. The number is reduced compared to the 2022 equity incentive plan. It has a positive effect on stabilizing core employees and is conducive to the long-term development of the company. We believe that on the one hand, this equity incentive guarantees the stability of the company's core talent team, and on the other hand, it also shows the company's confidence in the growth of performance from 2023 to 2024.

R & D capabilities continue to improve. In 2022, the company gradually promoted fund-raising projects in an orderly manner, increased investment in R&D of new products and technologies, etc., and R&D expenses increased rapidly. The company has introduced a large number of business cadres and R&D talents to enhance the company's R&D capabilities. R&D results are expected to be gradually realized from 2023 to 2025, leading to profit growth.

The company's data capabilities are solid. The company has made full use of advanced technologies such as artificial intelligence, big data, cloud computing, and digital twins to accumulate more than 650,000 kilometers of autonomous driving road test data, more than 1 million pieces of autonomous driving sample data, more than 60,000 autonomous driving scenario libraries, more than 40,000 failure sample data, and more than 2,000 failure dynamic scene libraries, and built an effective, forward-looking, and stable comprehensive scenario library platform. The amount of data the company has accumulated over many years is conducive to the implementation of a vertical model of car-road collaboration, and continuous training can be carried out to achieve optimization and iteration through enhanced learning. The commercial transformation scenario can be expected in the future.

[Investment advice]

We believe that the company has accumulated solid data, years of technology accumulation in the industry, and is actively expanding more data-driven smart car market segments. Due to overall economic fluctuations and changes in industry policies, we adjusted our forecasts for the company's performance. The company's estimated revenue for 2022-2024 is 528, 733, and 951 million yuan, net profit attributable to the parent company is 0.32, 1.15, 176 million yuan, EPS is 0.35, 1.24, 1.90 yuan, and corresponding PE is 162.75, 45.67, 29.98 times, maintaining the “increase in holdings” rating.

[Risk Reminder]

Decline in industry sentiment;

The order fell short of expectations;