Introduction to this report:
After the company's ArcMuse computing technology engine completed the filing, the PSAI video generation function was implemented as scheduled, and the pace of marketing accelerated markedly. Personal apps will continue to be launched in the future to expand the user base. The commercial auction business may exceed expectations.
Incidents:
On May 23, 2024, ArcSoft PSAI officially launched the AIGC TuSen video feature.
Commentary:
Maintain the target price of 38.1 yuan and maintain the “Overweight” rating. Maintain the 2024-2026 EPS forecast of 0.36, 0.48, and 0.60 yuan. Maintain the target price of 38.1 yuan and maintain the “Overweight” rating.
After the smart commercial production completed the filing of the core algorithm, the video generation function was implemented as scheduled. According to the official account of Hongsoft, the company's ArcMuse Computing Technology Engine passed a generative AI filing license from the State Internet Information Office at the end of April, and the Smart Commercial Cloud Studio was newly launched. On May 23, Hongsoft's PhotoStudioAI smart commercial platform officially launched the AIGC video production function, focusing on clothing and upgrading the intelligent marketing promotion model, which can greatly save video shooting time and costs for brands and e-commerce merchants. There are also rich digital human models and scenes to meet diverse and personalized display needs. The key to this type of function is the degree of detail reproduction, and the company's products can produce realistic natural dynamic effects. This feature is an important upgrade for PSAI. PSAI has become a full-stack commercial production platform, which helps enhance the appeal and cohesiveness of cooperation with downstream customers such as brands and e-commerce merchants.
The smart retail market has great potential, and the pace of PSAI promotion has accelerated markedly. Commercial advertising is a natural scenario for AIGC implementation. There is no need for market education. It is also a high-frequency scenario. The focus is on promotion and rapid promotion. According to the Ministry of Commerce's “China E-Commerce Report (2022)”, at the end of 2022, there were 13.19 million online retail physical goods stores nationwide, of which 25.51% were clothing, shoes, hats, and knitted textiles. According to the company's official website, PSAI has launched a variety of membership plans, with monthly packages ranging from 48-888 yuan/month. Simply assuming that each clothing category store invests 1,800 yuan a year (the average is only 150 yuan/month), the smart clothing market space can reach 6 billion yuan, and there is still several times more room for further expansion into other categories. Since the company resumed its launch in early May, the company PSAI has successively entered the Alibaba Group's Qianniu Merchant Workbench, 1688 Platform, and Doudian Microapp, including C2C, B2B, and short video platforms, and the pace of promotion has accelerated markedly.
Personal apps will continue to be launched in the future, and the commercial marketing business prospects are worth looking forward to. According to an investor exchange on May 24, 2024, the company has created an app for C-end users. The product prototype development has been completed, and it will be launched at any opportunity. It is expected that relying on the core algorithm advantages and existing product experience accumulated in the mobile phone and in-vehicle business, it will also show amazing results. The app for TOC users will further open up space for business growth and further improve the closed loop of the company's ecosystem.
Risk warning: Smart commercial market space estimation is based on certain hypothetical assumptions and may deviate from actual market space; AIGC progress falls short of expectations; overseas risk, etc.