The multi-field layout of automotive software gives it a “buy” rating

The company's business layout covers many automotive software fields such as smart cockpits, intelligent driving, and new energy. The business model includes customized software development, software technical services, software licensing, etc. The company is expected to continue to benefit from the trend of intelligent automobiles. Considering the large reduction in the company's gross margin in 2022, the rapid expansion of personnel size, the increase in R&D investment, and the increase in expenses brought about by the implementation of the equity incentive plan, the company's net profit for 23-25 is estimated to be 0.63, 1.10, and 157 million yuan ($1.29 and 163 million yuan before 23-24). Comparable to the company's 24E average PE 57.3 times (Wind), the 24-year PE is 57.3 times, and the target price is 68.06 yuan (previous value: 61.17 yuan), “buy”.

Automotive software is deployed in multiple fields, and revenue is expected to continue to rise

Looking at the 23H1 revenue structure, 1) The smart cockpit business achieved revenue of 141 million yuan, an increase of 24.1% over the same period.

Mainly benefiting from the increase in demand for large-screen and multi-screen smart cockpit development; 2) The intelligent driving business achieved revenue of 86 million yuan, an increase of 48.6%, of which revenue from autonomous driving software development was 0.14 billion yuan, an increase of 93.0%. Among them, AVM technology was recognized by many customers. Intelligent connected vehicle testing revenue was 56 million yuan, an increase of 151.0%, mainly due to data security policies driving rapid growth in new customers and orders in the autonomous driving testing business; 3) The new energy business revenue was 0.2 million yuan, an increase of 84.2%. The company owns Xiaomi in China Customers such as Group, Great Wall Motor, GAC Group, etc. The company is deployed in many fields of smart cars, and intelligent automobiles provide the driving force for the company's continued high revenue growth.

Combine AI technology to create a new software delivery model, develop efficiency or further improve the company's next-generation in-vehicle software delivery model “Super Software Factory”. By building a basic platform for digital development, a basic knowledge base platform, and application component library, a “superbrain” is built to form a software development system driven by intelligence. The Super Software Factory includes five major product systems: a knowledge base construction and application platform, an intelligent requirements platform, an intelligent development platform, an intelligent testing platform, and an intelligent organization collaboration platform, covering the automotive software development and management process. At this stage, AI has begun to be applied in the instrument business to achieve batch demand extraction, demand structuring, and demand differentiation. Automate code generation and testing through an intelligent development platform. We believe that by incorporating AI technology into the workflow, the company can further improve the efficiency of software development based on its own accumulated industry business data.

Continuously improving the underlying platform integrating core technology IP, the mass production product launch accelerated. The company integrated full-stack development capabilities and core technology IP in the fields of smart cockpit, intelligent driving, new energy, etc., launched a self-developed in-vehicle software platform KCarOS, and established a smart cockpit domain control platform, an intelligent driving domain control platform, and an intelligent electronic control platform based on this, which can be combined with various customer domain control chips to achieve rapid launch of mass-produced products. The company has launched a cockpit domain control solution based on the Xinchi X9HP, a cockpit domain control solution based on Qualcomm 8295, and an integrated mobile and parking domain control solution based on the Horizon J5. We believe that with the continuous improvement of the company's underlying software platform, the implementation of mass-produced products is expected to accelerate.

Risk warning: The automobile intelligence process falls short of expectations; macroeconomic fluctuations.