Core views

In the first half of 2024, Sagiteng Juchuang achieved revenue of 0.727 billion yuan, a year-on-year increase of 121%, achieving gross profit of 0.099 billion yuan, corresponding gross profit of 13.55%, and net profit to mother of -0.269 billion yuan. The loss ratio narrowed sharply year on year, and profitability gradually improved. In the first half of the year, the company's lidar sales volume was about 243,400 units, up 415.7% year on year. Among them, automotive lidar sales were about 234,500 units, up 487.7% year on year, and continued to lead the global market.

Looking ahead to 2024, as the company's advantages of scale continue to be unleashed, revenue is expected to maintain high growth, gross margin is expected to continue to rise, expenses are expected to continue to be optimized during the period, the absolute loss amount of net loss and loss ratio are expected to narrow drastically, and profitability will continue to be optimized.

occurrences

In the first half of 2024, Sagiteng Juchuang achieved revenue of 0.727 billion yuan, a year-on-year increase of 121%, achieving gross profit of 0.099 billion yuan, corresponding gross profit of 13.55%, and net profit to mother of -0.269 billion yuan. The loss ratio narrowed sharply year on year, and profitability gradually improved.

Brief review

Revenue and shipments continued to grow rapidly. In the first half of 2024, the company achieved revenue of 0.727 billion yuan, up 121% year on year, of which revenue from ADAS lidar was 0.609 billion yuan, up 315% year on year, accounting for 84% of revenue, and 0.077 billion yuan for robotics and other lidar, down 12% year on year. The revenue share fell back to 11%, driving the company's revenue growth rapidly in the vehicle regulation market. In the first half of the year, the company's lidar sales volume was about 243,400 units, up 415.7% year on year. Of these, automotive lidar sales were about 234,500 units, up 487.7% year on year. In the second quarter, the company sold about 123,000 units and vehicle lidar sales volume was about 118,300 units, continuing to lead the global market. As of June 30, 2024, the company has successfully obtained mass production orders from 22 automakers and 80 Tier 1 models, and achieved SOP for 29 models from 12 of these customers. In the first half of the year, the number of targeted customer partnerships exploded. At the same time, mass production orders for 17 new models were added, and large-scale mass production and delivery of 5 new models began.

The gross margin continued to increase, and the cost ratio for the period was significantly optimized. In the first half of 2024, the company achieved gross profit of 0.099 billion yuan, corresponding to a gross profit margin of 13.55%, an increase of 9.68 pct over the previous year, mainly due to a further increase in the company's scale effect. In terms of period expenses, in the first half of 2024, the company's sales expense rate/R&D expense rate/management expense ratio were 7.84%/43.10%/11.31%, respectively, down 4.37 pct/31.78 pct/40.51 pct from the previous year. Benefiting from increased gross margin and improved period expenses, the company's profitability increased significantly. In the first half of 2024, the company achieved net profit to mother of -0.269 billion yuan, corresponding to a loss rate of 37.02%, which was a sharp decrease over the previous year. Looking ahead to 2024, as the company's advantages of scale continue to be unleashed, revenue is expected to maintain rapid growth, gross margin is expected to continue to rise, expense ratios are expected to continue to be optimized during the period, and the absolute loss amount and loss ratio of net losses are expected to narrow drastically.

The M3 and MX releases continue to lead the industry. In the first half of 2024, the company successively released two new products, the ultra-long-range lidar M3 and the next-generation medium- and long-range lidar “1000 yuan machine” MX, leading industry transformation and accelerating industrial upgrading and iteration with a product strategy of “improving technology and equal technology”. By the end of July, the new product had received fixed-term orders for various models from 5 customers, and the first targeted project will achieve large-scale mass production in the first half of 2025.

Profit forecast and valuation: We expect the company's revenue for 2024-2025 to be 2.266 billion yuan and 3.151 billion yuan, respectively, up 102% and 39% year-on-year, with net profit attributable to mother of -0.431 billion yuan and -0.32 billion yuan, respectively, and corresponding net interest rates of -19.0% and -1.0%, respectively. Maintaining a “buy” rating, the target price is HK$19.06, which is 2.5 times PS in 2025.

Risk warning: 1) Macroeconomic risks; the domestic economy and the global economy are facing downward pressure, and terminal consumer demand falls short of expectations; low expectations of the Fed's interest rate cut process are dragging down the overall performance of the Hong Kong stock market; uncertainty about the development of Sino-US relations. 2) Industry risks: Low expectations for the intelligent driving development process; low expectations for the development of the urban NOA development process; low expectations for the development of the solid-state blindness market; lidar technology iteration, performance improvement, cost control, and large-scale mass production fall short of expectations; industry competition is becoming increasingly fierce. 3) Company risk: Potential technology substitution risk; low expectations for the company's technology iteration, low expectations for new product launch progress; risk of loss of customers; low expectations for mass production capacity; low expectations for product delivery due to potential supply chain risks; low expectations for improved gross margin and low expectations for net interest rate increases. 4) Other risks: The Hong Kong stock market is sluggish, and the company's trading volume expectations are low.