Key points of investment:
The world's leading provider of intelligent operating systems
As the world's leading provider of intelligent operating system products and technology, Zhongke Chuangda firmly plays the role of a “technology foundation provider”. Through the “acquisition+self-research” development strategy, the company relies on Qualcomm and has established an ecological card advantage that is difficult to replicate in the industry. With full-stack operating system technology, Zhongke Chuangda focuses on the intelligent software business and actively promotes the development of smart cars and smart internet to meet the wave of intelligence. Furthermore, the company established Xiaowu Intelligence to enhance its strategic position in the robotics business and accelerate its layout in the robotics business field, which is expected to create new space for future growth.
Large intelligent space on the end side
The automotive industry is welcoming the “new four modernizations” transformation, and “software-defined automobiles” have become a development trend. The Yiou think tank predicts that China's automotive software market is expected to reach 3.44 trillion yuan in 2030, and the value of automotive software will account for or increase to 65% of the total vehicle value; intelligent IoT is widely used, which can improve efficiency, reduce costs, optimize experience, etc. IoT Analytics predicts that the number of global IoT connections is expected to reach 15.52% CAGR from 2022; industrial robots help enterprises digitally transform, which is the key to improving production efficiency and reducing labor costs. IFR predicts that the global industrial robot market is expected to reach $23 billion by 2024.
Smart to Intelligent strategy upgrade
Since its development, Zhongke Chuangda has gone through three successful strategic transformations, starting with Android system development and gradually expanding into the fields of intelligent software, smart cars, and intelligent Internet of Things, forming three major business layouts.
Today, in the context of the rapid development of artificial intelligence technology, the company closely follows the trend of the times, upgrades the Smartto Intelligent strategy, independently develops the Rubik's Cube model, and realizes deep integration of artificial intelligence technology with smart terminal operating systems. The “AI+OS” platform empowers all industries and helps the company open up the ceiling for upward growth.
Profit Forecasts, Valuations, and Ratings
We expect the company's 2024-2026 revenue to be 63.47/78.89/99.55 billion yuan respectively, with year-on-year growth rates of 21.08%/24.30%/26.18% respectively; net profit to mother will be 6.32/8.78/ 1.121 billion yuan respectively, with year-on-year growth rates of 35.63%/38.85%/37.89%, with a 3-year CAGR of 37.45%; EPS of 1.37/1.91/2.63 yuan/share, respectively. Given that the company is the world's leading provider of intelligent operating systems, the average PE of comparable companies in 2024 was 42 times, and the company was given 45 times PE in 2024, with a target price of 61.85 yuan. For the first time, coverage was given, and a “buy” rating was given.
Risk warning: AI progress falls short of expectations, smartphone shipments fall short of expectations, intelligent automotive development falls short of expectations, and the IoT market is highly uncertain.