Incident: The company released its 2023 annual report. In 2023, the company achieved operating income of 5.242 billion yuan (-3.73%), realized net profit of 466 million yuan (-39.36%), and realized net profit of 340 million yuan (-49.62%) after deducting non-return to mother.
The company continues to promote strategic transformation, and R&D investment has increased significantly to ensure the company's long-term growth. In 2023, the company fully launched the Smart to Intelligent strategy and is committed to investing in the research and development of large AI models. The company's annual R&D investment reached 1,458 billion yuan, an increase of 19.78% over the previous year, and profits were under pressure in the short term due to strategic transformation investment. The company's gross margin in 2023 was 36.95%, down 2.34pct year over year. After a strategic transformation in 2023, the company has achieved key progress in product development for vehicle operating systems and industrial robots, and is expected to enter a return on investment period in 2024.
The advantages of the company's long-term smart car software layout have been highlighted, and the revenue of intelligent driving software has reached a record high. “Cabin driving integration” has triggered new changes in the industry. AI technology is driving the beginning of an era of central computing in the automotive industry, and the company's long-term deployment of smart car software has established a core advantage. The company integrates leading OS products and technical advantages from cockpit to driving, vigorously invests in the development of HPC products integrating vehicle operating systems and cabin driving, and launched the industry's first vehicle operating system product - the “Drip Water OS” vehicle operating system. In 2023, the company's smart car business achieved revenue of 2,337 billion yuan, an increase of 30.34% over the previous year. Among them, the revenue of intelligent driving software reached 182 million yuan, making a historic breakthrough.
The company's core card end side AI and IoT business resumed growth in the second half of the year. In 2023, the company's intelligent IoT business achieved revenue of 1,489 billion yuan, a year-on-year decrease of 15.45%. Despite the decline in revenue in some IoT categories due to macroeconomic factors, the company established a rich IoT core product line, achieved platform integration capabilities, and reversed the decline and resumed growth in the second half of 2023. Software is the core of the intelligent process of IoT devices. The company's core card terminal AI integrates the operating system with end-side intelligence technology. It has core capabilities such as development board reference design, system optimization and adaptation, and end-side quantitative tailoring. It continues to expand the product circuit, and there is plenty of room for subsequent growth.
According to the company's 2023 annual report, we forecast that the company's earnings per share for 2024-2026 will be 1.35/1.93/2.46 yuan (the original 24-25 forecast was 3.03/3.97 yuan, downgraded revenue and expense forecasts). Referring to the comparable company's 2024 price-earnings ratio, the corresponding target price is 54.00 yuan, maintaining the purchase rating.
Risk warning
The implementation of intelligent automobiles falls short of expectations, the expansion of the intelligent IoT business falls short of expectations, and other benefits account for a relatively high risk