Key points of investment:

The big model has passed the filing, and the commercial studio is newly launched! The ArcMuse computing technology engine combines ArcSoft's large visual model, segmentation and shallow small model, guidance control model, and CV&CG low-level engine package collaboration, and has excellent image generation and video generation capabilities, and has successfully passed the National Internet Information Office's “Interim Measures on Generative Artificial Intelligence Service Management”.

Based on this engine, Hongsoft PhotoStudio AI Smart Commercial Photography Cloud Studio has been newly launched, and various aspects such as functional interface, operation process, and user medical examinations have been optimized and upgraded.

The main target users of commercial products are e-commerce users, which can shorten the time and cost of steps such as photography, model selection, and retouching.

Currently, online features include static product maps, graphic model maps, and editing functions. It has the advantages of easy operation, second-level production, and rich model scene resources.

Advantages of this online update: 1) Simple operation steps: you can obtain 4 high-definition images by uploading an image, selecting the style (model/scene), and clicking Generate in 3 steps. 2) More choices: Add model expression options, hair tags, and multiple model pose options. 3) Product maps and character maps enhance detailed control and creativity. 4) Quick retouching: The AI editing function supports intelligent lighting, beautification, and image quality upgrades to the generated images.

A variety of pricing options, including monthly, seasonal, and annual subscriptions, as well as optional configurations, business customization, and energy pack purchases.

Take a model picture as an example. Generating 4 images at a time costs 40 hongdou, and the estimated cost is 1.92 yuan according to the monthly PSAI plan. Compared with traditional commercial methods of hiring photographers, models, and retouching, the cost reduction and efficiency are remarkable.

The ability to generate videos is a key feature that will be launched later. On May 24, 2024, Hongsoft Commercial Production is expected to officially launch AIGC video generation functions for commercial production, including automatic generation of product display videos and automatic generation of fashion model videos. By uploading flat still images, it is possible to capture detailed characteristics, texture, color, etc. and generate realistic dynamic commercial videos, further providing a way to reduce costs and increase efficiency for social e-commerce and content e-commerce.

Maintain an “Overweight” rating. Maintaining the profit forecast, revenue for 2024-2026 is expected to be 882, 10.79, and 1,236 million yuan, and the estimated profit forecast for 2024-2026 is 1.98, 319, and 404 million yuan. Consider the company's broad development space for AIGC, smart terminals, intelligent driving, etc., and maintain the “gain” rating.

Risk warning: New product development falls short of expectations, and downstream customers are affected by macroeconomics to reduce their budgets.