It is expected to continue to benefit from the trend of intelligent automobiles and maintain “buy” ratings
The company released its three-quarter report. 23Q1-Q3 revenue was 2,318 million yuan, an increase of 11.58%, net loss of 495 million yuan for the same period last year (loss of 59 million yuan for the same period last year), net loss of 497 million yuan for non-homologated mothers (loss of 60 million yuan for the same period last year); 23Q3's quarterly revenue was 817 million yuan, an increase of 15.17%, and a net loss of 200 million yuan for the same period last year (loss of 024 million yuan for the same period last year). Losses are mainly due to the decline in the company's overall gross margin combined with increased investment in expenses. We believe that in the future, the company is expected to continue to benefit from the trend of intelligent automobiles. The EPS for 2023-2025 is expected to be -0.11/0.02/0.07 yuan. Segment valuation: 1) Chip business 23E has a net profit of 63 million yuan, comparable companies have an average of 23E63.3xPE (Wind), giving 23E 63.3xPE; 2) Other business 23E has revenue of 3.479 billion yuan. Comparable companies have an average 23E 7.5xPS, 23E is 7.5xPS, with a target price of 12.61 yuan, maintaining a “buy” rating.
Actively stock up to seize smart car opportunities, and profitability fluctuates in the short term
The gross profit margin of 23Q1-Q3 was 42.4%, down 14.1 pct year on year, of which 23Q3 gross profit margin was 36.5%, down 20.9 pct year on year. The decline in gross margin was mainly due to the company's active promotion of smart driving and smart chip business inventory, and the rapid increase in operating costs. As of the end of 23Q3, the company's inventory was 909 million yuan, up 30.81% from the beginning of the year, mainly due to an increase in raw materials and products for the Smart Driving and Zhixin business; prepayment of 160 million yuan, an increase of 80.95% over the beginning of the year, mainly because the company increased stocking for some materials through prepayment methods. We believe that the company actively prepares goods, lays a good foundation for grasping the changes in the smart car industry, and is expected to benefit from the transformation of the smart car industry in the future.
The smart driving business released a lightweight plan, and continued investment in R&D to drive product iteration 23Q3. The company focused on releasing the lightweight pilot assisted driving system NOP Lite and the NOP lightweight high-precision map HD Lite for all urban scenarios, providing a cost-effective smart driving solution. Currently, the company's smart driving includes three product lines: L2 driving products, L2+ integrated parking products, and dual domain integrated vehicle parking products, all of which have reached a mature state of mass production and have been designated by mainstream OEMs. 23Q1-Q3's sales/management/R&D expenses rate was 7.5%/11.3%/52.2%, a year-on-year change of 1.1/-2.2/4.6 pct.
The company maintains a high level of R&D investment and actively promotes research and development of projects such as autonomous driving maps and autonomous driving cloud platforms. We believe that the gradual implementation of the smart driving business is expected to provide an important impetus for revenue growth.
Smart cars are deployed in multiple fields, or are the first to benefit from smart driving technology. The company focuses on the main road of intelligent automobile racing, is deeply involved in the main business line of the intelligent automobile racetrack, and develops the four major business segments of Zhiyun, Smart Cabin, Smart Driving, and Zhixin, and is expected to continue to benefit from the trend of intelligent automobiles. Consider that businesses related to the Internet of Vehicles are affected by the external environment, the economy is declining, raw material prices are high, and revenue forecasts are lowered.
The company continues to increase investment in R&D and raise cost forecasts.
Risk warning: R&D results fell short of expectations, and the commercialization of intelligent driving was lower than expected.