Event: On October 19, Bohui Technology released the third quarterly report of 2023. In the first three quarters of 2023, the company realized revenue of RMB 122 million yuan, with a year-on-year growth of 38.72%; the net profit attributable to parent company was RMB-33 million yuan, and the loss was basically the same as that of the same period last year, with a year-on-year growth of-4.50%.

Profit pressure, continue to increase R & D investment. In the first three quarters of 2023, the company's sales, management and R & D expenses were CNY 43 million, CNY 14 million and CNY 39 million respectively, with year-on-year growth of 10.02%, 19.35% and 12.71% respectively, accounting for 35.28%, 11.48% and 32.00% of revenue respectively. Reasons for loss of performance:

On the one hand, in order to continuously improve its technical strength, the Company further increased its R & D investment and R & D expenses increased; on the other hand, in order to motivate the enthusiasm of the core team, the Company formulated and implemented an equity incentive plan, and confirmed the relevant share payment expenses, and the sales expenses and management expenses increased accordingly.

Rooted in vertical fields, diversified market development. The Company actively understands the needs of downstream customers in different industries, provides matching products and solutions for downstream customers in different industries, applies audio-visual technology with independent advantages to intelligent education, telecommunications, military industry, civil air defense, meteorology, public security and other industries, and devotes itself to creating intelligent audio-visual base to assist the digital transformation of the industry.

Remodeling data analysis and decision support, using AI to drive regulatory development. The company continued to carry out innovation and application of AI technology, independently developed text, image, voice, video multi-modal recognition engine, and based on this to build the "Huishi" AI basic capability platform. At the same time, in order to enhance the video content review capability of the new media integrated broadcast control platform, the Company created the "New Media Integrated Broadcast Control Platform Content AI Review Scheme", applied the self-developed multi-modal AI recognition engine to optimize the content quality, so as to maintain the connection with the best practices of new media development, and the products have strong core competitiveness.

Investment suggestion: We expect the company's revenue in 23-25 years to be 250 million yuan, 320 million yuan and 403 million yuan respectively, and the net profit attributable to the parent company will be 0.50 million yuan, 0.70 million yuan and 100 million yuan respectively. Combined with the development of the company and the industry, we are optimistic about the company's layout in the field of video AI supervision and maintain the "buy" rating.

Risk hints: supply chain risk, technology blockade risk, domestic substitution process is not as expected, competition intensifies.