The company is a leading artificial intelligence enterprise in the industry. With artificial intelligence algorithms and chip technology as the core, it provides customers with self-developed core products such as algorithm software and chips. The company's products can be divided into 1) AI solutions for digital city scenarios; 2) AI solutions for human life scenarios; 3) AI chips.
A review of historical financial data. The company achieved revenue of 23/4.3/57/55,000 yuan respectively from 2019 to 2022, of which a large leap in revenue scale was achieved in 2020. In addition, revenue in 2022 was mainly affected by the epidemic. Among them, revenue in the first half of the year fell by more than 40%, making up sharply in the second half of the year. The company's net profit of Guimu was negative over the years due to higher expenses, and no profit was achieved. The gross margin of sales companies has declined in recent years, mainly due to a decline in gross margin in the urban and human life AI solutions sector. Digital city operations and management account for the highest share of the company's revenue, followed by AI solutions for human life scenarios, and again AI chips.
The company's chips are divided into the first, second, and third generation models. The first generation model is DeepEye 200, which began commercial use in 2017 for edge computing boxes; the second-generation chip DeepEye 1000 has been independently commercialized since 2019 and can achieve efficient data collection and front-end processing. Currently, it has established business partnerships with Hikvision, Alibaba Pingtouge, etc. The company's next-generation chip DeepGe10 began streaming during the reporting period. It can be widely used in scenarios such as AIoT edge video, mobile robots, etc. The company's chips did not generate large-scale sales during the reporting period. As of 1H2022, the total amount of the company's chip orders was 66.16 million yuan, far exceeding 2021's revenue. The company's chip customers include Hikvision, Alibaba's Pingtou, and Fuhan Microelectronics.
Market position: It is smaller than the four “AI” dragons, but it has chip capabilities and strong vertical industrial chain capabilities. Since the company has many competitors, we synthesize the layout, financial status, and market position of each competitor. Among them, Shang Tang, Kuang Si, Etu, and Yuncong Technology, famous for the “Four AI Dragons”, is larger than Yuntian Lifei in terms of revenue, but in terms of chips, only Etu Technology has released related products. There are three main categories of comparable companies we've selected here:
1) AI solution companies: Since companies in the AI sector have few stable profits, and currently only Hong Kong-listed Shangtang-W and A-share Yuncong Technology, the above 2 companies are preferred for comparison companies; 2) Algorithmic chip companies: At the same time, we consider that Yuntian Lifei has the ability to develop its own chips, so we will also include Cambrian here as a measure of valuation among comparable companies;
3) In order to expand the scope of reference, we also ranked Danghong Technology, whose main business is video decoding, and Hongsoft Technology, whose main business is intelligent image processing, as relatively comparable companies.
Comparable company valuation references. Based on the above, since the valuation systems of AI companies and chip companies are mainly based on the market sales rate PS, we also use PS as the main valuation measure here. Currently, Shangtang Technology corresponds to 2022 PS 22 times, and Yuncong Technology is 80x. The market value of Yuntian Lifei's current offering is 15.6 billion dollars. The corresponding PS in 2022 is 28.6x, which is lower than the industry average.
Risk warning: risk of product development falling short of expectations, risk of loss of key technical personnel, risk of core technology being leaked; negative net profit, risk of recovery of capacity security deposits, risk of declining return on net assets; risk of increased risk of international trade friction