Investment events

The company disclosed its 2023 annual report, with annual revenue of 1,056 million yuan, an increase of 4.7% over the previous year; net profit loss to mother was 1,234 billion yuan, and a loss of 975 million yuan for the same period last year.

Key points of investment

The company's profitability declined in the short term and is expected to pick up in 2024

The company's gross margin in 2023 was 31.5%, down 7.9pcts year on year, mainly due to the increase in the revenue share of the logistics sector with low gross margin and the decline in the revenue share of the education sector with high gross margin. We believe that in 2024, as orders in the education sector are gradually confirmed, gross margin is expected to pick up; the company's sales, management and R&D expense ratios were 47.9%, 37.9%, and 46.4%, respectively. The year-on-year changes were +10.9pcts, -2.7pcts, and +3.9pcts, respectively. The sales expense ratio increased a lot, mainly due to share payments and advertising Increased promotion costs.

Business review: Order confirmation in the education and industry customization sector was delayed, and the logistics and consumer sectors progressed smoothly (1) Education: Business revenue in 2023 was 347 million yuan, a year-on-year decrease of 32.8%, accounting for 32.9% of revenue, mainly because some projects that won or were signed in 2023 had not completed delivery and acceptance at the end of the year. (2) Logistics: Business revenue of 390 million yuan in 2023, up 47.9% year on year, accounting for 36.9% of revenue, mainly due to the company's improved product competitiveness, continuous launch of new products, increased repurchases from original customers, increase in new customers, and increase in new application scenarios. (3) Industry customization: Business revenue in 2023 was 62 million yuan, a year-on-year decrease of 24.5%, accounting for 5.9% of revenue, mainly because some projects that won or were signed in 2023 had not yet completed delivery and acceptance at the end of the year.

(4) Consumption: Business revenue in 2023 was 255 million yuan, up 91.5% year on year, accounting for 24% of revenue, mainly due to global sales of first-generation cat litter, second-generation cat litter and Cyclone Strong Suction Sweeper all achieved mass production, and Borderless Smart Lawn Mowers progressed smoothly, etc.

Humanoid robots: Since 2024, they have made breakthroughs one after another. The “Tiangong” platform was officially released (1). In February, the company Walker S entered the NIO Auto Factory assembly workshop to conduct on-site “training”, enabling the world's first humanoid robot to collaborate with humans on an automobile factory assembly line to complete automobile assembly and quality inspection operations.

(2) On April 1, the company Walker S connected to Baidu Wenxin's big model for task scheduling application development, and quickly built task planning and execution capabilities. Its innovative application and implementation difficulty are in the first tier of the industry.

(3) On April 27, the company, as the lead unit and general manager unit, jointly established the Beijing Humanoid Robot Innovation Center in collaboration with leading enterprises and institutions in the Xiaomi Robotics and Beijing Mechatronics industry, and officially released the self-developed general humanoid robot parent platform “Tiangong”, which can achieve stable running at 6 km/h.

Profit forecasting and valuation

Maintain profit forecasts and maintain an “gain” rating. We expect the company's net profit to be -888 million yuan, -406 million yuan and 019 million yuan respectively in 2024-2026. The company's current R&D expenses are large, and the losses are expected to decrease as technology matures and revenue scale increases; operating income is 1,569 billion yuan, 2,328 billion yuan, and 3.323 billion yuan, respectively, with year-on-year growth rates of 49%, 48%, and 43%, respectively, corresponding P/S of 45, 30 and 21 times, respectively. Considering that the company is the core target of the entire humanoid robot machine in China, it maintains a “gain” rating.

Risk warning: The progress of technological development and industrialization falls short of expectations; the company's downstream orders and deliveries fall short of expectations.