Key points of investment
Silk Road Vision: a leader in integrated visual services
The company focuses on creativity and technology, deeply integrating culture and technology. The company is engaged in a comprehensive digital vision service business based on CG creativity and technology. It is in the middle of the digital culture industry chain. It supports upstream suppliers such as basic software developers and application terminals; and starts application fields such as games, film and television, VR/AR, industrial manufacturing, online education, and government public services. The company's main products are 1) comprehensive digital exhibition and display business; 2) digital content application business; 3) other CG related business.
Consolidate the main business: present creativity with technology, define vision with numbers
The company's main business can be divided into comprehensive digital exhibition and display business and digital content application business. 1) Comprehensive digital exhibition and display business: In '22, the business revenue was 1,033 billion yuan, accounting for 80.04% of total revenue. It has become the company's main business track and a core revenue growth point. Digital content production is the company's core gene, and digital exhibition display is an important carrier and ultimate target for carrying a large amount of digital content. As a talent-intensive industry, the leading market is concentrated, and the medium to long-term markets are scattered. We believe that the company is one of the companies with pure digital content production genes and a large team size among companies in the same industry; 2) Digital content application business: In '22, this business revenue was 214 million yuan, accounting for 16.61% of total revenue. This business is the company's traditional dominant business, including static digital content and dynamic data content.
Frontier innovation: Focusing on digital creative technology, deploying XR, digital twins, and cloud rendering on the basis of its main business, the company vigorously develops strategic innovation business and continues to expand interactive digital content application scenarios around the main line of digital creative technology. 1) Subsidiary company Silk Road Vision: AR/VR/MR comprehensive solution provider, providing comprehensive solutions for metaverse content and scenario construction, covering various fields such as education, intelligent manufacturing, marketing, etc., and has achieved a closed loop of commercialization; 2) Subsidiary Tiya Mathematics: focusing on digital twins, building an “urban brain” to help digital transformation and business efficiency; 3) Joint company Ruiyun Technology: a leader in visual cloud computing in China, providing offline rendering, real-time rendering, cloud storage, data transmission and other services in the visual field, with excellent technical capabilities, has served Changjin “Lake”, “Wandering Earth”, etc. Famous domestic film and television productions.
Profit forecasting and valuation
We expect the company's revenue for 2023-2025 to be 1,519/17.49/1,929 billion yuan respectively, up 17.64%/15.15%/10.31% year on year. Net profit attributable to shareholders of the parent company was 0.37/0.70/103 million yuan, up -19.61% /89.38%/46.10% from the previous year; EPS was 0.31/0.58/0.85, respectively, and the corresponding PE was 88.56/46.76/32.01 times the closing price on December 12, 2023. Considering the company's excellent capabilities in CG and XR on the technology side, and the mature and steady development of its main business on the content creation and application side, superimposed VR/AR/MR has been applied to a wide range of fields and commercialized at the cutting edge, a certain valuation premium has been given, and for the first time, it has been given an “increase in holdings” rating.
Risk warning
Risk of bad debts on accounts receivable; risk of rising human resources costs; risk of failure to implement capital raising investment projects; risk of macroeconomic and market fluctuations; risk of new technology and new business development falling short of expectations; risk of increased competition in the industry.