The product matrix was upgraded, and the performance reached a record high in 2023. According to the company's 2023 annual performance forecast, the company achieved net profit of 275-310 million yuan (YoY+ 110%-137%) in 2023; net profit after deduction of 2.62 to 297 million yuan (YoY+ 123%-153%), all of which hit record highs since listing.

The main reason for the increase in the company's performance is due to the results achieved through the company's long-term R&D investment. The company focuses on the main “cloud-edge-end” smart storage and smart IoT product lines, continues to launch competitive products and upgrade its business model to provide cloud platform services to enhance innovation capabilities and core technical strength. Second, the company continues to optimize supply chain management to reduce raw material costs. Colleagues continue to strengthen intelligent manufacturing and unmanned factory construction to reduce manufacturing costs. Furthermore, in 2023, the company will promote the layout of the server industry chain, laying a solid foundation for the company's future growth.

The share of cloud video platform business and overseas smart security business has increased, leading to an increase in the company's overall gross margin. The company's products are mainly IoT smart terminals and intelligent storage terminals. The main products include data storage devices: solid state drives, mechanical hard drives and NAS memories; IoT smart terminals: smart cameras, smart doorbells, solar cell cameras, pet cameras, child care cameras, smart speakers; smart wearable terminals: smart watches, smart bracelets; smart cleaning categories: sweepers, moppers, and car vacuum cleaners. In the smart storage business, the company has entered enterprise-grade storage and self-developed storage chips, and continuously increased investment in software and hardware integration; in the smart IoT business, the share of cloud video platform business and overseas smart security business has increased, increasing the company's overall gross margin.

Continue to lay out AI-related businesses to drive a new round of performance growth curves. (1) AIGC side: In terms of cloud video, the company adheres to audio and video codec and intelligent storage technology as the core, provides multi-scenario smart terminals and services, and has launched value-added applications including AI intelligent push, data storage and management, user usage behavior analysis, and user visualization applications. (2) Server business: The layout of the company's server industry chain is being actively promoted. The main business of the company's Yantian branch is: R&D, production and sales of data storage devices and IoT smart terminals; purchasing equipment and materials for server R&D, production and sales from the company's holding subsidiary SEMSOTAInoth nc, etc.; providing servers and other related technology, maintenance services, etc., and the company's related business scope and business volume will gradually increase as market demand increases. (3) Storage aspect: As more and more application information is converted into data for storage and processing, the importance and value of data is getting higher and higher. At the same time, the rapid development of AI cloud computing is generating new demand for high-performance storage servers, which is also expected to drive the growth of the company's performance.

Profit forecast: The company's revenue for 2023-2025 is estimated to be 46.60/59.57/7.143 billion yuan, respectively, and net profit to mother is 300/4.88/578 million yuan, respectively, raised to a “buy” rating.

Risk warning: The competitive landscape in the storage market worsens, cloud business development falls short of expectations, AI-related business progress falls short of expectations, changes in the macro environment, and valuation models and profit forecasts fall short of expectations