Incident: On January 29, the company released its 2023 performance forecast. In 2023, the company is expected to achieve revenue of 30.60-3.420 billion yuan; net profit to mother -12.21 billion yuan to -977 million yuan, a year-on-year decrease of 263.01%-190.40%; net profit not attributable to mother -12.89 to -1,074 billion yuan, a year-on-year decrease of 267.01%-205.84%.
Market competition is fierce, and performance is under pressure in the short term. The company's performance declined in 2023. On the one hand, market competition led to continuous squeezing of the company's product margins; on the other hand, in order to respond positively to market changes, the company continued to promote management and organizational optimization and strengthen customer localization services, leading to year-on-year increases in management expenses, sales expenses, etc.; in addition, the losses of some of the company's participating companies all had a negative impact on the company's short-term performance. Looking ahead to 2024, the company will continue to focus on its main business and implement various cost reduction and efficiency measures, reasonably control pre-research R&D investment, further improve resource utilization, and focus on improving profitability.
The smart driving business is the main line and has become the main driver of revenue. The company's smart driving business grew rapidly. 2023H1 achieved revenue of 144 million yuan, +41999.87% year-on-year, and its revenue share increased from 0.02% of 2022H1 to 9.59%. The company provides cost-effective integrated software and hardware products with leading advantages to help customers achieve different levels of intelligent driving functions. At present, the company has reached strategic cooperation with companies such as Milimo Zhixing, Horizon, Renesas, and Chuhang in the field of intelligent automotive technology and products to promote mass production and implementation of L2 and above intelligent driving, which is expected to contribute new growth points.
Chip shipments continue to increase, and the growth of Zhexin's business is prominent. The company provides automotive electronic chips for multiple scenarios such as car body domain, smart driving domain, cockpit domain, site domain, and power domain. Customers cover mainstream domestic and foreign automakers and Tier 1. SoC chip shipments continue to grow, and the product line covers entry-level to mid-high-end needs; MCU chips are constantly being iterated, and higher-performance domain-controlled multi-core MCU chips and AI chips are also being developed, which are expected to benefit from the rapid development of the wave of automotive intelligence and localization.
Zhiyun Smart Cabin competition intensifies, grasping industry trends and actively expanding new products. In line with the development trend of the intelligent driving industry, the company is actively expanding new product lines and launching cost-effective solutions such as scene maps and lightweight high-precision map HD Lite products for urban NOA needs. In addition, the company has strong data collection and processing capabilities, cloud-based integrated service capabilities, and closed-loop data service capabilities, and will transform from a data and software service provider to a software and hardware integrated system solution provider.
Profit forecast and investment advice: The company's net profit for 2023-2025 is estimated to be -11.07/-4.91/-113 million yuan, respectively, and the PB corresponding to the current stock price is 1.6/1.7/1.7 times, respectively. The company has transformed from a traditional map supplier to a new Tier 1, focusing on the main intelligent automotive circuit, with smart driving as the main business line. It specializes in the four major businesses of Zhiyun, Smart Cabin, Chip, and Smart Driving. It has integrated software and hardware and closed loop data service capabilities, and is expected to benefit from the rapid development of the automobile intelligence wave. First coverage, giving a “buy” rating.
Risk warning: Industry competition increases risks, commercialization of technology falls short of expectations, risk of fluctuations in raw material prices, risk of macroeconomic fluctuations.