Revenue grew steadily, invested heavily in R&D, and basically completed the full-coverage layout of vehicle electronic control products. In 2024, H1, the company achieved revenue of 2.027 billion yuan, a year-on-year increase of 19%; net profit to mother -0.333 billion yuan, compared to -0.089 billion yuan in the same period last year. The company has invested heavily in R&D since 2022, 22-23 and H1 in '24. The company's R&D expenses were 0.656 billion yuan, 0.968 billion yuan, and 537 million yuan, respectively, up 44%, 48% and 26% year-on-year. According to the company's 23rd annual report, the increase in revenue is mainly due to the rapid development of businesses such as intelligent driving, new energy, chassis control, and self-developed software; at the same time, the company has increased R&D investment in central computing platforms and regional controllers to meet the customized needs of many automakers in the vehicle control domain; intelligent driving products cover intelligent sensors, integrated driving and parking, and high-level autonomous driving controllers; chassis domain controllers are already equipped with multiple models, integrating the company's complex domain control software, suitable for the next generation of vehicle electronic and electrical architectures; AR-HUD products have begun mass production to support certain mainstream vehicle models . The company's high-level intelligent driving overall solution business uses the company's full-stack self-developed electronic control products, covering “car-road-network-cloud-map” and various fields of operation to provide comprehensive support for efficient and reliable operation.

Self-developed software has been systematized to achieve commercialization. The company's test product line, bus product line, diagnostic product line, comprehensive simulation product line, and cloud platform product line continue to iterate and improve functions. Multiple versions of functional software were released in 2023 to closely meet customer needs, enhance comprehensive software capabilities, and help customers develop and test vehicles. The main software series products INTEWORK, ModelBase, and OrienLink have all expanded and applied the customer base, covering customers such as Hongqi, BYD, NIO, Changan, Sinotruk, Zero Run, Baidu Apollo, ZEEKR, GAC, etc.; while expanding the customer base, they are also continuing to explore major customer value.

Build a “vehicle-road cloud integration” solution for intelligent connected vehicles to help pilot cities build and land. According to the company's WeChat account, since 2018, the company began to lay out V2X vehicle-road collaborative product development, using the port L4 driverless driving scenario as a breakthrough, and gradually built a product system including the vehicle-side communication unit OBU, roadside communication unit RSU, integrated sensing system FPU (integrated solid state lidar, millimeter wave radar, camera, etc.) and a V2X cloud control platform. The company provides an end-to-end self-developed solution for vehicles, roads, networks, clouds, maps, and research, including specialized modules such as vehicle-end autonomous driving, roadside V2X vehicle-road collaboration, remote remote control driving based on 5G networks, back-office cloud scheduling, digital twins, simulation systems, high-precision maps, and V2X simulation testing, forming a complete integrated vehicle road cloud solution. The company participated in the formulation of intelligent connected vehicle standards by the Ministry of Industry and Information Technology and the preparation of port traffic road collaborative standards. Since 2021, the company's V2X vehicle road collaboration products have been successfully deployed in multiple port scenarios, including Rizhao Port, Longgong Port, Jingtang Port, etc. Through continuous iteration and optimization of L4 operation scenarios, it has been implemented in multiple scenarios such as V2V and V2I.

Profit forecasts and investment recommendations. We believe that the company will continue to lay out on the intelligent connected vehicle circuit, basically complete the full-coverage layout of vehicle electronic control products, and form a “distributed electronic control unit - domain control product - L4 integrated platform” product model. It is expected to continuously increase customer penetration and drive business growth. As the smart network vehicle penetration rate further increases, assuming that electronic product revenue will grow 18%/17%/16% in 24-26; R&D services and solutions business revenue growth rate of 30%/29%/28%; overall business revenue growth rate for high-level intelligent driving solutions 90%/80% We expect the company's 2024-2026 revenue to be 5.682/6.865/8.252 billion yuan, respectively, net profit to mother of -0.183/0.063/0.189 billion yuan, EPS of -1.52/0.53/1.58 yuan respectively, and SPS of 47.35/57.21/68.77 yuan respectively, giving 2024 dynamic PS 2-2.5 times, and a reasonable value range of 94.71-118.38 yuan for the first time Coverage gives an “better than the market” rating.

Risk warning. The company's business progress falls short of expectations, and industry policy risks.