The company released its semi-annual report for 2023 on August 29. 2023H1 achieved revenue of 165 million yuan (yoy -9.66%) and net return profit of 140 million yuan; in a single quarter, 23Q2 achieved revenue of 104 million yuan (yoy +3.64%, QoQ +69.90%) and achieved net profit of 72 million yuan.

Reversing the downward trend in performance, growth resumed in 23Q2. On the revenue side, 23H1 achieved revenue of 165 million yuan, -9.66% year on year; 23Q2 achieved revenue of 104 million yuan, +3.64% year on year, and +69.90% month on month. The company ended three consecutive quarters of year-on-year decline since 22Q3, regained its upward trend and surpassed the 21H1 revenue level. We believe that the full year of 23 is expected to return to the level of the full year of '21, driven by emerging application scenarios, and is expected to achieve the annual equity incentive target of 47 billion yuan. On the profit side, the company 23H1 achieved net profit of -140 million yuan and gross margin of 42.30%; of these, 2023Q2 achieved net profit of -72 million yuan and gross margin of 41.23%. On the cost side, the company's expense rate during the 23H1 period was 150.72%, -0.51pct; the sales/management/development/finance rate was 20.52%/38.27%/101.86%/-9.94%, respectively; the year-on-year rate was +5.39/+3.32/-3.96/-5.26pct, respectively, and remained stable overall. Considering that the target of the 23H2 equity incentive assessment is 308 million yuan, we believe that under the multi-wheel drive of robots+3D printing+Microsoft replacement+medical insurance face brushing, the company's revenue is expected to double compared to 22H2.

The robot sensor technology is mature, the product matrix is rich, and the robot vision industry center will increase. The company is seizing the historic development opportunities of intelligent robots, and has launched rich and comprehensive robot visual sensing product solutions around various types of robots such as service robots, industrial robots, and ROS educational robots, and provides 3D vision sensors with monocular structured light, binocular structured light, lidar, and iToF technology routes. The company has served more than 100 robot companies around the world, with a market share of over 70% in the field of 3D vision sensors for service robots in China. The company has announced plans to raise additional capital to build a technology center for the robot vision industry, seize the historical development opportunities of embody intelligence, and welcome the increase in demand in the robot vision market with a full attitude.

23Q2 added the 3D printer business and made breakthrough progress, reaching strategic cooperation with industry leaders. 3D printing is accelerating its penetration into the consumer level, and the market prospects are promising. The company and Chuangxang 3D, a leading company in the industry, reached a strategic partnership. The company's AI lidar entered Chuangxiang 3D AI intelligent FDM flagship K1 Max to help it achieve high-speed, high-precision 3D printing, and solved the pain points of the FDM 3D printer industry in one fell swoop, such as long leveling time, difficult nozzle flow control, poor leveling effect, and difficulty in controlling first-layer quality. In addition, the two sides collaborated to launch smart 3D scanners and Nebula screen+AI lidar ecosystem products. Considering that Chuangxang 3D shipped more than 1 million units in '22, we are optimistic that the company has a broad space to connect with large customers, and is expected to accelerate the opening of the 3D printing blue ocean market.

Taking over the Azure Kinect technology and product line, we are entering the era of spatial computing with our peers at Microsoft. Microsoft announced on August 17 that it would stop production of the Azure Kinect Developer Kit for depth sensor devices, and stop selling it by the end of October. At the same time, it transferred the license for the Azure Kinect technology product line to the company. The company is expected to gradually replace the Microsoft Azure Kinect market starting 23Q4.

The medical insurance verification project was implemented at an accelerated pace, and the company's entire equipment achieved a breakthrough. This year, along with the launch and commercialization of national health insurance networks in various provinces and cities, many medical insurance terminals using the company's modules have been launched one after another; in addition to providing 3D camera modules, the company's complete equipment products in this field have also been implemented from 0 to 1, and have also provided face-brushing pads to some medical insurance terminal manufacturers, laying a solid foundation for subsequent large-scale shipments.

The company is one of the few companies that can benchmark against Intel Realsense in the field of robotic 3D sensors in China. It binds Nvidia to the two major intelligent golden tracks of “eyes+brains” of humanoid robots. Furthermore, the company's equity incentive assessment target 23H2 doubles revenue, and 23Q2 may become a clear inflection point for the company. I am optimistic that robots+3D printing+Microsoft replacement+medical insurance will drive the company back to rapid growth. We expect the company's revenue for 23-25 to be 526/836/1,254 million yuan, respectively, and the corresponding P/S is 25/16/11 times, respectively. Maintaining a “buy” rating considering that the company is the core target of robot intelligence.

Risk warning: technology iterative innovation risk, high customer concentration risk, risk of application scenarios falling short of expectations, supply chain risk