Ruiming Technology 2024H1 achieved revenue of 1.152 billion yuan, an increase of 48.83%, and net profit to mother of 0.124 billion yuan, an increase of 104.90%. After deducting non-return net profit of 0.118 billion yuan, an increase of 114.45%. Net cash flow from operating activities was 99.677 million yuan, down 23.47% from the same period.

Continued emphasis on R&D, SafeGPT was released, and products are more standardized. The company continues to innovate and accumulate technologies such as AI, big data, and high-definition video. In the first half of the year, the R&D cost was 0.144 billion yuan, the R&D cost rate was 12.52%, and 34 new patents (532 in total) and 3 software copyrights (a total of 264) were added. SafeGPT developed by the company has efficient risk aggregation identification and accident identification functions. Currently, the proportion of R&D personnel invested to meet customer customization needs has dropped to 33% from 60% three years ago. More R&D power is invested in standard product development and basic platform research and development, further improving R&D efficiency.

Driven by technological progress and regulations, commercial vehicle intelligence is expected to maintain a good growth trend. Commercial vehicles guarantee safe operation, ensure vehicle compliance, driver compliance, fleet compliance, etc., and prevent production safety accidents. The attention paid by operators and supervision is constantly increasing. Commercial vehicle operations have entered an era of safety management driven by big data and AI, and the demand for intelligent collaborative investment in vehicle fleets is increasing. China's national standard GB15084-2022 (corresponding to Europe and Japan is UN-R46) will soon be implemented, and a new generation of electronic rearview mirror CMS models that replace traditional optical rearview mirrors with a camera+screen combination will be allowed to go on the road. In terms of policy, both domestic and foreign countries are continuously improving requirements for the safe operation of commercial vehicles. The “Notice of the General Office of the Ministry of Transport on Promoting the Application of Intelligent Video Surveillance and Alarm Technology” stipulates that “two passengers and one danger” vehicles newly entering the road transport market should be equipped with intelligent video surveillance and alarm devices in front to achieve automatic recognition and real-time warning of drivers' unsafe driving behavior. European GSRII regulations require that new vehicle announcements begin in July 2022, and new vehicles are required to be equipped with six intelligent warning functions, including MOIS, BSIS, REIS, ISA, DDAW, and TPMS to enhance drivers' attention and alertness. UK DVS/PSS regulations require freight vehicles to install warning products to help drivers avoid the risk of blind spots when on the road, and the US and Japan are also following up on the corresponding regulations. The number of vehicle information technology product installations for transportation vehicles in North America and Europe was about 18% CAGR in 2022 to 2027, and the number of installations reached 8.8 million units and 0.7 million units respectively in '27.

Based on visual technology and industry data, we will continue to strive for secure closed-loop solutions. Ruiming Technology ranks first in the world in the market share of fleet video management systems, far surpassing rivals. Based on a large amount of collected vehicle operation data, the company has constructed a new intelligent safety management model with prevention as the main focus and strong intervention measures to improve safety levels and operational efficiency. 1) Perception: Combines external cameras such as ADAS, BSD, and AVM blind spots with millimeter-wave radar, and has low consumption, high accuracy (comprehensive operating condition accuracy > 95%) and strong robustness; 2) Intelligence: identifying potential risks, detecting the possibility of accidents and theft and robberies, which can reach thousands of people; 3) Cloud computing and big data analysis: image analysis of drivers and fleets, including pattern recognition, anomaly detection, etc.; 4) Intervention execution: from in-car sound and light alarms to customized voice reminders, to manual intervention and targeted driver training Hierarchical braking response system The braking force is intelligently adjusted according to the risk level. Through a pilot project in Shenzhen, Ruiming's closed-loop taxi safety solution reduced taxi accident rates by 30% and insurance losses by 40%.

The sales system is perfect, and the overseas business is expected to contribute to performance. The company has established 8 subsidiaries and 8 offices overseas, and its marketing network covers more than 100 countries around the world. As of August 2024, the number of overseas localization personnel has exceeded 40% of the total number of overseas teams. The company plans to establish a second manufacturing center overseas, establish a global settlement center, and establish multiple data centers. In the future, economically developed regions such as Europe and America will continue to be the main regions for the company's overseas business growth, while expanding into the Middle East, Central Africa, and Asia Pacific regions. Beginning in July 2024, new cars will be required to install devices that meet European standards when running on the road in mainland Europe. Ruiming Technology has completed the European standard inspection certification for basic all products. From October 2024, all heavy goods vehicles over 12 tonnes in Greater London must be equipped with active safety systems (PSS) to operate. As the European standard front assembly business gains fixed positions in more car manufacturers and innovative products such as AEBS and CMS are sold overseas, the company's overseas business growth is still quite sustainable. Domestic strategic cooperation has been reached with many mainstream bus platform software companies and system integrators. 2024H1, Rui Ming Technology's share of foreign revenue increased from 51.98% in 2023 to 52.18%, and the gross margin of foreign business rose slightly to 57.45%, and the overseas contribution to revenue and profit growth increased.

Profit forecast and investment suggestions: The company is a leader in commercial vehicle intelligence, leading the market share of vehicle fleet video management systems, and focuses on overseas markets. In the first half of 2024, general commercial vehicle products increased by 40.93%, and commercial vehicle industry information technology products grew by 29.32%, providing good support for the annual results. The company's total revenue for 2024-2026 is estimated to be 2.245/2.721/3.23 billion yuan, corresponding growth rate of 32.09%/21.24%/18.70%; net profit to mother is 0.219/0.306/0.388 billion yuan, up 114.42%/39.83%/26.93% year-on-year. The corresponding EPS is 1.26/1.77/2.24 yuan. Looking at comparable companies, Desai Xiwei, Huayang Group, and Guangting Information are all automotive intelligent solution manufacturers, which are more related to the company's main business. The three comparable companies forecast an average PE of 36.98/29.23/24.49 times for 2024-2026. The current price of Ruiming Technology corresponds to 2024-2026 PE at 23.75/16.98/13.38, giving it a “recommended” rating.

Risk warning: risk of exchange rate fluctuations in exporting countries, risk of geopolitical and trade friction, risk of market competition and technology development, risk of global macroeconomic downturn.