Incidents:
On May 4, the company issued a suspension notice on planning to issue shares and pay cash to purchase assets and raise supporting capital and related transactions.
Comment:
The acquisition of Mouxin Technology is expected to form a synergistic effect to enhance competitiveness. The target asset of this transaction is 49% of Mouxin Technology's shares. Before the transaction, the company held 51% of Mouxin Technology's shares. After this transaction, Mouxin Technology will become a wholly-owned subsidiary of the company. The transaction is expected to issue shares and pay cash to purchase assets, and raise supporting capital from no more than 35 specific targets to issue shares. The main products of Mocin Technology are security monitoring system back-end equipment (DVR, NVR, etc.) SoCs and smart home device SoCs with screen displays. Mouxin Technology has a high degree of coincidence with the company's downstream customers, which can form a strong synergistic effect, which is expected to further enhance the company's market position in the field of security video surveillance.
23Q1 performance improved month-on-month, and the product range was gradually improved to help increase performance. 2023Q1 achieved revenue of 416 million yuan, a year-on-year decrease of 19.22%, an increase of 6.92% over the previous year; the net profit of Guimo was 509 million yuan, a decrease of 42.42% over the previous year, an increase of 15.40% over the previous year; net profit after deducting non-Gumo's net profit was 507 million yuan, a year-on-year decrease of 39.53%, an increase of 109.07% over the previous year. The main reason for the year-on-year decline in 2023Q1's operating performance was weak demand from downstream customers and a decline in revenue from businesses such as security monitoring. The company's product line continues to increase, and the product structure gradually changed from the original ISP to IPCSoC as the main product. At the same time, XVR SoC and automotive product lines are expected to become new growth points for the company. Currently, the company's inventory is at a relatively reasonable level. As the product range continues to be enriched, business performance is expected to gradually increase.
The process platform continues to be optimized, and the Internet of Things & Vehicles opens up room for growth. The company's products include end-side ISP/IPC chips, edge-side XVR/NVR and other series of chips. Front-end and back-end collaboration have one-stop solutions. Currently, ISP, Codec, NPU, and Analog IP continue to develop and iterate, and advanced process platforms and software and hardware platforms have achieved remarkable results. In the smart IoT business, the company continues to expand cooperation with leading brands and actively focuses on new application fields. In the smart vehicle business, AEC-Q100 certification was completed, ISO-26262 certification was accelerated, and a complete solution for vehicle cameras was provided and mass production was provided. The company has a deep understanding of customer needs, and its market share is expected to continue to increase.
The first coverage gave an “increase in holdings” rating. The company's R&D conforms to the trend of high-definition and intelligent video, actively expands the Internet of Things and in-vehicle business, and is expected to achieve continuous growth. The company's revenue for 2023-2025 is estimated to be 2,432/30.29/3.70 billion yuan respectively, and the net profit of the mother is 445/582/725 million yuan respectively. The corresponding PE is 31, 24, 19 times, respectively.
Risk warning: Market demand, new product development falls short of expectations, and the risk of increased industry competition