2023 is a critical year of strategic transformation, and the company's business is developing healthily. 2023 is a key strategic transformation period for the company. At the beginning of the year, the company began formulating strategic transformation strategies and clarifying business goals. While maintaining healthy and sustainable business development, the company ensures strategic investment in innovative business directions of vehicle operating systems, industrial robots, and end-side intelligence to achieve product and technology breakthroughs, and provide support for the company's long-term growth. In 2023, the company achieved operating income of 5.242 billion yuan, a year-on-year decrease of 3.73%; realized net profit of 466 million yuan, a year-on-year decrease of 39.36%; and net cash flow from operating activities of 755 million yuan, an increase of 51.89% over the same period last year. After a strategic transformation in 2023, the company has achieved key progress in product development for vehicle operating systems and industrial robots, and 2024 will enter a return on investment period.
Driven by intelligent driving, the automotive business continues to grow rapidly. In 2023, the company's smart car business achieved revenue of 2,337 billion yuan, an increase of 30.34% over the same period last year. Among them, the intelligent driving business developed rapidly, and the intelligent driving software revenue achieved revenue of 182 million yuan, making a historic breakthrough. The company and Suzhou Changxing Smart Driving Vehicle Technology Co., Ltd., which was invested and established by Qualcomm and Lixun Precision, have launched the self-developed intelligent driving domain controller RazorDCX Pantanal and have completed preliminary vehicle verification, indicating that it has the ability to develop and deliver a complete vehicle class with integrated mobile and parking domain control. Furthermore, the joint venture between the company and Horizon is growing rapidly. Under close collaboration between the two parties, various projects based on journey chips are progressing steadily, and mass production has been successfully achieved, providing excellent solutions for different car manufacturers and Tier 1 customers.
The huge industrial transformation brought about by the “integration of cabin driving” and the new wave of AI technology are also driving another upgrade in the automobile industry. The core value of software has been highlighted, and the era of central computing has fully begun.
In the era of software-defined robotics, the company fully lays out the machine business. On September 27, 2023, the company's robotics team, Xiaowu Intelligence, was established, establishing the core of the robotics business. In terms of product rhythm, the company has released intelligent mobile robot products for warehousing, logistics, and manufacturing scenarios. It can realize automated warehousing, picking, distribution, etc., as well as automatic production equipment docking in various production processes in the manufacturing industry, and material transfer, handling, and stacking operations between multiple processes, thus achieving efficient flexible manufacturing. The company will continue to strategically integrate comprehensive resources such as products, technology, and teams in the robotics business, and will continue to cultivate a full range of products such as AMR, forklift robots, and composite robots.
The IoT business product line continues to expand. In 2023, the company's intelligent IoT business achieved revenue of 1,489 billion yuan, a decrease of 15.45% compared with the same period last year. In the process of intelligent IoT devices, software becomes the core. It requires operating systems, standard middleware, industry middleware, industry algorithms, and also performs overall application management and development environment deployment management tools. The demand for these software is a huge opportunity, key industrial position, and core card position for the company across the IoT circuit. Despite the decline in some categories of the Internet of Things, since the company established a rich IoT core product line and achieved platform integration capabilities, the IoT business reversed the downward trend in the first half of 2023 and resumed growth in the first half of 2023.
Profit forecasting and investment advice. We believe that the development of end-side AI is changing our lives. The trend of software-defined hardware is clear, and the company's core card position at the operating system level is expected to continue to drive the company's long-term development. We forecast that the company's revenue for 2024-2026 will be 65.92/80.13/9.868 billion yuan, and net profit to mother will be 797/10.18/1.296 billion yuan, respectively, and corresponding EPS of 1.73/2.21/2.82 yuan, respectively. Referring to comparable companies, based on the current industry stage and company growth rate and barriers, the 2024 dynamic PE45-50 rate was given, with a 6-month reasonable value range of 77.95-86.62 yuan, giving it a “superior to the market” rating.
Risk warning: The progress of the intelligent connected vehicle industry falls short of expectations, the progress of AI technology falls short of expectations, and industry policy risks.