Incident: The company released a report for the first quarter of 2023. In Q1 of 2023, the company achieved revenue of 416 million yuan, YOY -19.22%; net profit of the mother was 59 million yuan, YOY -42.42%; after deducting net profit of the non-return mother, the net profit of the non-return mother was 57 million yuan, YOY -39.53%.
Short-term performance declines, and profitability is expected to improve. The company achieved revenue of 416 million yuan, YOY -19.22% in 23Q1; gross profit margin of 38.93%, YOY +3.25%; net interest rate of 12.82%, YOY -29.11%. The decline in the company's revenue was mainly due to insufficient overall market demand. Major customers lagged behind the company's business due to safety inventory considerations; the company's expense rate increased during the 23Q1 period. Among them, the sales, management and financial expenses rates were 1.22%/7.01%/1.10%, and YOY+123.99/+7.64/ +7.64/ +7.98%, respectively. With the continuous evolution of terminal application trends such as artificial intelligence, 5G, and the Internet of Things in 2023, continuous application growth and innovation in the field of computer vision sensing have caused various industries to generate a large demand for video intelligence, and the company's business is expected to grow.
Continue to invest in innovative research and development to accelerate the upgrading of new technologies. The company's R&D expenses continued to grow rapidly from 2020 to 2022, amounting to 114 million, 250 million, and 301 million respectively. 23Q1 R&D expenses were 66.57 million, an increase of 7.98% over the previous year. In 2022, the company's ISP, Codec, NPU, and Analog IP continued to develop and iterate, reaching a new level of platform and software technology. The company invested heavily in the development of next-generation ISP, H.266 video encoder, intelligent processor NPU technology, advanced process platform, software and hardware platform, etc., and achieved remarkable results.
The product matrix is rich, and new products help increase performance. In the field of professional video processing, the company has a full range of professional products, from analog to digital, from front-end cameras to back-end recorders. The company and its subsidiaries have launched a series of high-performance, low-power products and solutions with high-quality image processing and coding performance. Based on self-developed NPU, a series of high-performance algorithms have been developed to support intelligent functions such as professional-grade figure/vehicle detection. Aiming at the smart IoT market, the company has cooperated deeply with consumer electronics customers of many brands, covering various smart vision products. In 2022, the company's products continued to be introduced. High-performance low-power cameras were mass-produced by customers on a large scale, using Turnkey solutions, RTOS solutions, etc. to achieve mass production for customers, and launched a variety of smart camera chip products targeting consumer scenarios. Targeting the field of smart car travel, the company has professional vehicle regulations ISP+ analog video link chip+vehicle DVR chip to form a series of competitive products from in-vehicle rear to in-vehicle front, from inside to outside the cabin. In 2022, the company launched a new generation of in-vehicle ISP products, which can be applied to products such as AVM/DMS/OMS/DVR. The company's front-loading chip has been able to ship front-loading products on a large scale, and has completely replaced foreign chip solutions. The ISO-26262 functional safety system certification is progressing steadily, and chip product design work based on functional safety and information security is also progressing simultaneously.
Profit forecast: The company is expected to achieve revenue of 2,427/30.09/3,904 billion yuan in 2023-2025; Guimu's net profit is 4.52/587/782 million yuan. Maintain a “Recommended” rating.
Risk warning:
(1) The risk of fierce competition in the market;
(2) Technological innovation risks;
(3) The risk of high customer concentration;
(4) The risk of international trade friction.