Description of the event
On April 23, 2024, the company released its 2023 annual report, 2024Q1 performance announcement, and 2024 stock option incentive plan (draft).
In 2023, the company achieved revenue of 1,699 billion yuan, +22.80% year over year, and realized net profit of 102 million yuan, +169.54% year over year; 2024Q1 achieved revenue of 502 million yuan, +37.19% year over year, and realized net profit of 53 million yuan, +120.74% year over year.
The company released the 2024 Stock Options Incentive Plan (draft). For the assessment year 2024-2026, the plan is to grant incentives to 146 people, with a stock option exercise price of 21.12 yuan (stock price 27.00 yuan as of April 23). The target value for the 24-26 assessment is a year-on-year increase of 42.60%/65.80%/87.10% based on net profit for 23 years.
Incident comments
Domestic and foreign market demand picked up, and the company gradually got out of the business quagmire. The company's main business is commercial vehicle informatization, which is highly correlated with the macro environment. After listing in 2019, it has successively experienced many adverse factors such as the 2020 US NDAA Act, 2021 supply chain fluctuations, and the 2022 business environment, which have had a serious impact on market demand and company operations. In 2023, with the development of the global economic situation, domestic and foreign market demand picked up to varying degrees, and business returned to a growth trajectory.
Profitability continues to improve, and the trend of business repair continues. In 2023, the company's overall gross margin was +4.20 pct year on year. By business, the gross margin of the comprehensive monitoring information system was +3.44 pct year over year, general monitoring products were +6.12 pct year on year; in 2024q1, the company's overall gross margin was +0.71 pct year on year, and the net margin was +3.75 pct year on year. The company's revenue in 2023 is close to its previous high, and overall profit is still low. We believe that the business repair process is continuing, and we are expected to achieve another high increase in 24 years from 23, or to reach a new high profit within the next 1-2 years. The target value of equity incentives is moderate, and there is a large profit margin between the exercise price and the current price. It is expected to have a clear positive effect on employee enthusiasm and guarantee the company's future growth.
The company's in-vehicle video surveillance products are gradually developing into fully intelligent third-generation “intelligent vehicle video surveillance products”, mainly serving all types of commercial vehicles in vehicle mobile scenarios and solving industry pain points. Freight: Targeted solutions to problems such as poor driving habits, large vehicle blind spots, long driving cycles, and tight transportation tasks. Bus: Optimize bus routes, station settings, schedule scheduling, etc., and improve the level of comprehensive bus management. School buses: safety alerts, records of illegal acts, providing a legal basis for punishment. Rental: Implement a closed-loop management system combining operation supervision and safety monitoring. Muck: A closed-loop system combining a smart terminal and a supervisory platform. Furthermore, intelligent security based on 5G and AI technology, relies on 5G vehicle networking with ultra-high bandwidth and low latency and learning of video data to complete behavioral prediction and effectively transform “passive defense” into “active warning.”
Investment suggestions and profit forecasts: Emerging technologies such as AI, V2X, and 5G drive in-vehicle video surveillance and upgrade from “passive defense” to “active prevention”. It is expected that the future will continue to fully benefit from the development of the commercial vehicle information technology market. In 2020-2022, the company's operations at home and abroad were affected by the business environment, and the company recorded its first loss since listing in 2022. With the transformation of the business environment, demand for commercial vehicle information technology products from government and enterprise customers has recovered. The improvement in the business environment has helped the company to quickly develop business after meeting customer needs, and successfully reversed losses in 2023. Revenue and profit are expected to continue to recover in 2024, continuing rapid growth in performance. We expect the company's net profit to be 2.04, 2.95, and 416 million yuan in 2024-2026, an increase of 100%, 44%, and 41% over the previous year. The corresponding PE is 26, 18, and 13 times, giving it a “buy” rating and is highly recommended.
Risk warning
1. The company's overseas business development falls short of expectations;
2. The company's orders, production and delivery fell short of expectations.