On August 25, the company issued an announcement. The company signed a cooperation agreement with Wuxi Kaigu and Kaili Wuzhi to jointly promote the “Alter AI Innovation Empowerment Center” project. Based on the above cooperation projects, the company is expected to obtain Nvidia's hardware and software products, build an intelligent computing center with leading performance, explore the application of large AI models in automotive R&D and design, and help the intelligent development of companies in the industrial chain. The company is one of the few independent development enterprises in China that can cover the entire vehicle development industry chain and has the ability to independently develop vehicle platforms. It is expected that it will continue to benefit from the release of new brands and models of electric intelligence. Considering the inconvenient free movement of personnel in 2022, which affected the company's acquisition of new projects that year, which in turn affected the company's cumulative orders, we lowered the company's 2023/24 EPS forecast to 0.36/0.54 yuan, added the 2025 EPS forecast to 0.78 yuan, gave the company 58xPE in 2023, corresponding to a target price of 21 yuan, and maintained the “buy” rating.

Reach a tripartite cooperation to build an intelligent computing center based on Nvidia's hardware and software products. On August 25, the company issued an announcement. The company signed a cooperation agreement with Wuxi Kaigu and Kaili Wuzhi to jointly promote the “Alter AI Innovation Empowerment Center” project. Based on the above projects, the company will carry out AI scientific research and technical research to create artificial intelligence application solutions such as large models, diversified automobile design, and predictive AI tool sets in the field of automobile R&D.

During the cooperation process, the partners will provide products and technical support such as NVIDIA DGX and NVIDIA Tesla GPUs for the cooperation project, as well as NVIDIA GPU Cloud technical resources and technical support, and will do their best to facilitate Alter to join the ranks of NV AI ecosystem partners. We believe that the company is expected to acquire Nvidia's hardware and software products based on the above cooperation projects and build an intelligent computing center with leading performance. In terms of business model, on the one hand, the company will use its own intelligent computing center to explore the application of large AI models in the fields of design creativity, simulation analysis, performance prediction, and user experience research to reduce costs and increase efficiency; on the other hand, the company is also expected to provide basic computing power supply service support to industry chain companies to drive industrial innovation.

Release a fixed increase plan to accumulate long-term growth. The company announced a fixed increase plan. It plans to privately issue ≤ 150 million shares to ≤ 35 specific investors, raising a total of less than 1,509 million yuan in capital, mainly for super intelligent computing centers and next-generation AI digital platform construction projects for automotive R&D applications, Tianjin Alte Intelligent Innovation Center double construction projects, new energy powertrain production base construction projects, and Alter Smart Digital Technology R&D projects. Among them, the company plans to invest 580 million yuan to build an intelligent computing center with a computing power of 200 pFlops to support the implementation of artificial intelligence. On the other hand, the company continues to implement its international development strategy, and has had in-depth communication with many domestic and foreign companies, such as a leading domestic automaker and the Malaysian listed company SUNSURIA BERHAD, on overseas market business development. In the Tianjin Alte Intelligent Innovation Center double construction project, the company announced that it plans to invest 200 million yuan to build a modern vehicle manufacturing center to further enhance the company's automobile modification, trial manufacturing and mold manufacturing capabilities to meet the needs of overseas OEMs for small-batch, intelligent and electrification of automobiles.

Proactively lay out intelligent electric technology and continue to explore the application of large AI models in automotive R&D. The company is a leading full-chain automobile design company in China. It has forward-looking and deployed a number of technologies in the field of intelligent electric vehicles, and R&D is progressing smoothly. In terms of intelligent driving, the company has planned two controllers, the first of which uses an integrated travel and parking solution, which is expected to be released within the year. In terms of intelligent control, the company has completed the power domain controller B sample bench test and carried out the B-type DV test. Furthermore, the company tried to use AI technology to improve R&D efficiency, and set up an artificial intelligence and digital laboratory in the first half of this year. Currently, the company has used AI machine learning to assist CAE simulation in optimizing vehicle weight reduction and aerodynamic parametric models; it has also used AI algorithms to train models for collision resistance and pedestrian protection to quickly predict results. As of the first half of 2023, the company had 1,544 patents and 66 copyrights, including 57 invention patents. In addition, the company announced that it plans to introduce employee stock ownership plans for 320 people, including supervisors and executives. The corresponding total number of shares is 4.1 million shares (accounting for 0.82% of the total share capital). This move is conducive to stabilizing and encouraging the team, and promoting the continuous and steady growth of the company's performance.

Risk factors: core customer business risks; the speed of launch of new models by customers and consumer acceptance after launch fell short of expectations; the speed of implementation of parts industrialization fell short of expectations; the company's non-public offerings and fund-raising project construction progress fell short of expectations.

Profit prediction, valuation and rating: The company is one of the few independent developers in China that can cover the entire vehicle development industry chain and has the ability to independently develop vehicle platforms. It is expected to continue to benefit from the launch of a large number of new electric intelligence brands and models. Considering the inconvenient free movement of personnel in 2022, which affected the company's acquisition of new projects that year, which in turn affected the company's cumulative orders, we lowered the company's 2023/24 EPS forecast to 0.36/0.54 yuan (the original forecast was 0.69/0.91 yuan), and added the 2025 EPS forecast to 0.78 yuan. The company has gradually entered the field of intelligent automobiles in recent years. Research and development of intelligent driving and intelligent control products has progressed smoothly, and will gradually promote the construction of intelligent computing centers to create a major model in the field of automobile research and development. Therefore, we use Desai Seaway and Jingwei Hengrun as comparable companies. According to Wind's unanimous expectations, Desai Seaway and Jingwei Hengrun PEG have an average value of 1.4. Combined with our 2023-2025 performance growth rate forecast of 48%, and since this year, the company's order signing and delivery have shown a steady improvement. Based on the principle of prudence, we gave the company 1.2 xPEG, corresponding to the valuation of 58xPE in 2023. The target price is 21 yuan, maintaining the “buy” rating.