Core views

In 2023, Sagiteng Juchuang achieved revenue of 1.12 billion yuan, a year-on-year increase of 111%, achieved gross profit of 94 million yuan, corresponding gross profit of 8.36%, and realized net profit to mother of -4337 billion yuan. The loss ratio narrowed year-on-year, and profitability gradually improved. Since 2023, with strong technical product strength and a broad customer application base, the company has been growing rapidly in the field of automotive front equipment, and sales have grown by leaps and bounds. In 2023, the company's ADAS lidar sales volume was about 243,000 units, an increase of 559% over the previous year. In December 2023, the company's automotive lidar sales volume was nearly 71,000 units in a single month, surpassing the full year of 2022. Looking ahead to 2024, as the company's advantages of scale continue to be unleashed, revenue is expected to maintain rapid growth, gross margin is expected to continue to rise, expenses are expected to continue to be optimized during the period, the absolute loss amount and loss ratio of net loss are expected to narrow drastically, and profitability will continue to be optimized.

occurrences

In 2023, Sagiteng Juchuang achieved revenue of 1.12 billion yuan, a year-on-year increase of 111%, achieved gross profit of 94 million yuan, corresponding gross profit of 8.36%, and realized net profit to mother of -4337 billion yuan. The loss ratio narrowed year-on-year, and profitability gradually improved.

Brief review

Revenue grew rapidly, and the advantages of scale continued to be unleashed. In 2023, the company achieved revenue of 1.12 billion yuan, up 111% year on year. Of this, revenue from ADAS lidar was 777 million yuan, up 385% year on year, accounting for 69% of revenue. Revenue from robotics and other lidar was 186 million yuan, down 22% year on year, and the revenue share fell back to 17%. The vehicle regulation market drove the company's revenue growth rapidly. Since 2023, with strong technical product strength and a broad customer application base, the company has been growing rapidly in the field of automotive front equipment, and large-scale advantages have continued to be unleashed. In 2023, the company's ADAS lidar sales volume was about 243,000 units, up 559% year on year. In December 2023, the company sold nearly 71,000 units of automotive lidar units in a single month, surpassing the full year of 2022. 2023Q4's automotive lidar sales volume was about 147,500 units, an increase of 714.92% year on year. The company has also achieved continuous rapid growth in terms of targeted models and the number of models mass-produced and launched on a large scale. As of December 18, 2023, the company has received targeted orders from 21 car companies and 62 Tier 1 models. In the same period, the company has helped 12 of these customers achieve large-scale mass production of 24 models, which is a significant increase compared to the 9 mass-produced models launched by 7 customers by the end of March.

The gross margin was corrected, and the cost ratio for the period was significantly optimized. In 2023, the company achieved gross profit of 94 million yuan, corresponding to a gross profit margin of 8.36%, a year-on-year correction, mainly due to the company's economies of scale and reduction in semiconductor chip procurement costs. In terms of period expenses, the company's sales expense rate/R&D expense rate/management expense ratio in 2023 were 7.68%/56.70%/30.88%, respectively, down 5.03pct/0.99pct/4.63pct from the previous year. Benefiting from increased gross margin and improved period expenses, the company's profitability increased significantly. In 2023, the company achieved net profit of 4.337 billion yuan to mother, corresponding loss rate of 387%, which narrowed year-on-year. Looking ahead to 2024, as the company's advantages of scale continue to be unleashed, revenue is expected to maintain rapid growth, gross margin is expected to continue to rise, expense ratios are expected to continue to be optimized during the period, and the absolute loss amount and loss ratio of net losses are expected to narrow drastically.

Technology and market outlook: Driven by innovation and deepening cooperation. Since 2023, Sagiteng Juchuang has made new progress in technological innovation and market expansion. The company unveiled the new ultra-long-range lidar M3 at CES 2024. The product uses a 940nm laser transceiver solution to achieve a distance measurement capability of 300 meters @10%, breaking technical bottlenecks in the industry. Furthermore, the company has maintained close cooperation with NVIDIA to introduce second-generation intelligent solid-state lidar models into the Omniverse ecosystem, further improving the development efficiency of autonomous driving and AI perception technology. These developments not only demonstrate Suteng Juchuang's technical strength in the field of lidar and AI perception, but also lay a solid foundation for the company's future development. The company will continue to use its competitive advantages to implement growth strategies, including investing in core technology, improving product supply, strengthening manufacturing and supply chain capabilities, expanding its customer base, and attracting and retaining talent.

Profit forecast and valuation: We expect the company's revenue for 2024-2025 to be 3.111 billion yuan and 5,071 billion yuan, respectively, up 178% and 63% year-on-year, with net profit attributable to mother of -444 million yuan and 130 million yuan respectively, and corresponding net interest rates of -14.3% and 2.6%, respectively. A “buy” rating is given, and the target price is HK$49.6, which corresponds to 4 times PS in 2025.

Risk warning: 1) Macroeconomic risks; the domestic economy and the global economy are facing downward pressure, and terminal consumer demand falls short of expectations; low expectations of the Fed's interest rate cut process are dragging down the overall performance of the Hong Kong stock market; uncertainty about the development of Sino-US relations. 2) Industry risks: Low expectations for the intelligent driving development process; low expectations for the development of the urban NOA development process; low expectations for the development of the solid-state blindness market; lidar technology iteration, performance improvement, cost control, and large-scale mass production fall short of expectations; industry competition is becoming increasingly fierce. 3) Company risk: Potential technology substitution risk; low expectations for the company's technology iteration, low expectations for new product launch progress; risk of loss of customers; low expectations for mass production capacity; low expectations for product delivery due to potential supply chain risks; low expectations for improved gross margin and low expectations for net interest rate increases. 4) Other risks: The Hong Kong stock market is sluggish, the company's trading volume is low as expected, and the progress included in the Hong Kong Stock Connect falls short of expectations.