Key points of investment:
Deeply involved in the field of electroacoustics, from various types of consumer electronics to automobiles, and master high-quality customer resources. Guoguang Electric, formerly known as Guangzhou Guoguang Acoustics General Factory, has been deeply involved in the field of electroacoustics for more than 70 years, and is currently one of the largest, most systematic and specialized audio and smart hardware product design and production bases in the world. The main business focuses on the audio electroacoustic business. Bluetooth and smart speakers contribute the main revenue. The company has excellent manufacturing and R&D capabilities, smooth customer development, and forward-looking layout for AI speakers, car audio, and VR/AR, making it the second growth curve. The majority shareholder Zhidu Co., Ltd. provides accurate traffic monetization services for world-renowned companies such as Google, FACEBOOK, Yahoo, Walmart, and Amazon, and has agency licenses for many media channels such as Tencent, Baidu, Sogou, Ali, and iQiyi. There is synergy with Guoguang Electric in smart speaker research and development and customer development.
A leader in the smart speaker 2.0 era, the traditional main business is growing steadily. In the context of the rapid development of artificial intelligence AI technology, large models have become an important engine for the upgrading of the smart speaker industry. Major terminal manufacturers are gradually connecting large models to smart speakers. Ali launched the future Genie Sound with large models, and the Xiaodu Smart Screen X9 Pro connected to Wenxin's big model. Speakers have become important interactive entrances in the AI era. The world's first AI speaker equipped with ChatGPT was jointly developed by Vifa and Guoguang Electric, and exclusively produced by Guoguang Electric. It relies on ChatGPT and Baidu Wenxin's one-word AI, and focuses on chatting with high emotional intelligence. In terms of traditional main business, it covers leading international brands, and has established long-term cooperative relationships with high-quality customers such as Baidu, Harman, and Logitech to drive the company's growth.
From virtual reality to spatial computing, big manufacturers lead the XR sea of stars. Since 2022, hardware innovations such as Pancake, micro-OLED, eye tracking, and VST perspective have taken the lead, greatly improving the user experience. Apple Vision Pro was released in a big way, creating a high-end hardcore headset with thick and thin hair. Guoguang is deeply tied to major customers at home and abroad, and has become a core supplier of acoustic modules. It supplies products stably to M customers, P customers, etc., and has many ongoing research and mass production projects. R&D and manufacturing of fidelity, chip type, miniaturization, thinness, low power consumption, and high power miniature speakers is an advantage. At the same time, the VR machine business was fully laid out, and a VR all-in-one machine production line was established. In 2022, the company's first VR machine was successfully launched in a dedicated VR workshop.
Covered for the first time, a “gain” rating was given. The company's revenue for 2024-2026 is estimated to be 75/91/10.8 billion yuan, respectively. The company's Bluetooth audio business is stable, and smart audio will benefit deeply from AI; the intelligent trend is driving rapid growth in the number and value of bicycle speaker configurations; VRAR binds large customers and has long-term growth potential. The company's net profit for 2024-2026 is estimated to be 3.40, 4.16, and 510 million yuan, respectively. The current market value corresponds to PE of 22, 18, and 15 times, respectively. Comparable in 2024, the average PE of companies Rambler, Goertek, and Lixun Precision is 24 times, with room for increase of 9%, giving it a “gain” rating.
Risk warning: Risk of sales of AI terminal products falling short of expectations; risk of major customers selling new products later than expected; risk of weakening consumer electronics demand due to macroeconomic and epidemic factors.