Description of the event
With 2024H1, the company achieved operating income of 1.152 billion yuan, +48.83% year-on-year, and realized net profit of 0.124 billion yuan to mother, +104.90% year-on-year.
Incident comments
Changes in operating income & gross margin: 2024H1, by region, foreign revenue was 0.601 billion yuan, +44.72% year over year, and domestic revenue was 0.551 billion yuan, +53.59% year over year, all showing high growth. The domestic gross profit margin was 22.51%, and the foreign gross profit margin was 57.45%. The difference was nearly 35 pct, mainly due to large differences in market demand and supply patterns; in addition, the company's overall gross profit margin was 40.74%, -2.44pct year on year, mainly due to an increase in the share of low-margin domestic business; cost & profit side:
The company's sales expense ratio - 2.45 pct, is mainly due to the company's adjustment of sales personnel allocation according to market demand and business needs; management fee ratio - 1.41 pct, R&D cost ratio - 1.50 pct, mainly due to the three-level R&D structure improving the company's management and R&D efficiency. Overall, the company's expense ratio dropped a lot, and eventually achieved a net interest rate of 10.73% to mother, +2.94 pct compared to the previous year.
Highlights: 1. Overseas business is growing rapidly. The company helps the company continue to advance its globalization strategy through many measures such as setting up overseas subsidiaries & offices, increasing the proportion of overseas local employees, establishing IDC overseas, and building Vietnamese production plants; 2. The European standard front assembly business has completed certification in cooperation with mainstream domestic export bus manufacturers, and is expected to gradually enter the passenger car market. Products related to European standard rear-mounted PSS regulations have passed third-party testing at Loughborough University in the UK. The technical strength is in the first tier of the industry; 3. SafeGPT's large model platform products have been released and the platform has passed Efficient risk aggregation and incident identification functions provide customers with significant value. The vehicle safety management system has established cooperation with several large mining groups.
The company's in-vehicle video surveillance products are gradually developing into fully intelligent third-generation “intelligent vehicle video surveillance products”, mainly serving all types of commercial vehicles in vehicle mobile scenarios and solving industry pain points. Freight: Targeted solutions to problems such as poor driving habits, large vehicle blind spots, long driving cycles, and tight transportation tasks. Bus: Optimize bus routes, station settings, schedule scheduling, etc., and improve the level of comprehensive bus management. School buses: safety alerts, records of illegal acts, providing a legal basis for punishment. Rental: Implement a closed-loop management system combining operation supervision and safety monitoring. Muck: A closed-loop system combining a smart terminal and a supervisory platform. Furthermore, intelligent security based on 5G and AI technology, relies on 5G vehicle networking with ultra-high bandwidth and low latency and learning of video data to complete behavioral prediction and effectively transform “passive defense” into “active warning.”
Investment suggestions and profit forecasts: Emerging technologies such as AI, V2X, and 5G drive in-vehicle video surveillance and upgrade from “passive defense” to “active prevention”. It is expected that the future will continue to fully benefit from the development of the commercial vehicle information technology market. In 2020-2022, the company's operations at home and abroad were affected by the business environment, and the company recorded its first loss since listing in 2022. Industry demand recovered in 2023, and the company successfully broke out of the business quagmire and successfully reversed losses; in 2024, benefiting from the continuous recovery of industry demand+the implementation of European standards, many businesses continued to grow rapidly, and operating results are expected to reach new highs. We believe that there is still a lot of room for improvement in the company's commercial vehicle information technology penetration rate, and with the continuous iteration of the company's technology, the value of individual products has increased significantly; in addition, when competing against Samsara for US stocks, the company's valuation level is significantly low. Considering that the company can target its overseas friends from various perspectives such as market share and technical capabilities, we believe that there is still room for an upward trend in its valuation in the future. We expect the company to achieve net profit of 0.204, 0.295, and 0.416 billion yuan in 2024-2026, with a year-on-year increase of 101%, 44%, and 41%, corresponding to PE of 25, 17, and 12 times. The company's rapid growth is strong and continuous, giving it a “buy” rating and key recommendations.
Risk warning
1. The company's overseas business development falls short of expectations;
2. The company's orders, production and delivery fell short of expectations.