Always focus on “operating system+end side intelligence”, the world's leading provider of intelligent operating systems and end side intelligent technology and products. 1) Vehicle side: Since entering the automotive field in 2013, the company has built products and solutions for the entire life cycle of smart vehicles, including smart cockpits, intelligent driving, self-driving domain control platforms, vehicle operating systems, and central computing platforms; 2) Smart hardware: With the wave of end-side intelligence, the company's competitiveness in the fields of end-side intelligent scenario development and industrial automation has been further strengthened.

Deep partners on the Volcano engine end side are cooperating to promote the application of large models on the vehicle side & smart hardware side. On November 1, 2024, China Science and Technology Chuangda reached an in-depth cooperation with Volcano Engine to achieve complementary advantages in the implementation of large model technology, explore deep innovation cooperation in the field of artificial intelligence big model applications, and establish an artificial intelligence big model joint laboratory to promote the widespread application of Duanyun AI in the smart car field and create more attractive smart cockpit products to meet the diversified needs of global OEMs.

Big models of ByteDoo bags and AI toys are out of the market, and AI end-side applications continue to expand. With the release of the big bean bag model, the smart headset Ola Friend, and the AI toy “conspicuous bag”, Bytechain ushered in new growth opportunities. As a cloud service platform owned by ByteDance, Volcano Engine promotes enterprise AI transformation by opening up technical capabilities and application tools to external companies. From December 18 to 19, 2024, the 2024 Winter Volcano Engine Force Power Conference will be held in Shanghai. The Doubao Big Model Family will be fully upgraded, which is expected to expand the boundaries of AI scenarios.

AR glasses have full-stack technical capabilities, and the potential for related supporting businesses is beginning to show. MR/AR glasses are an important product direction for the company's platform technology layout. The product line includes integrated VR helmets, AR glasses, etc. The company has full-stack technical capabilities from system software development, XR function development, hardware design, and complete machine design to R&D testing, and works with Qualcomm and other industry chain partners to provide TurnKey (turnkey) solutions including machine+system+algorithm+app+ end-side intelligent model services to reduce the difficulty of product development and shorten the product launch cycle. Currently, the company is developing high-performance, low-power, and lightweight all-in-one smart glasses based on Qualcomm's special AR chips. The main application scenarios include personal AI assistants based on end-side intelligence.

Profit forecast, valuation and investment rating: We expect the company's net profit for 2024-2026 to be 0.422/0.559/0.763 billion yuan, respectively. Considering the promising prospects of the company's ARM architecture on the PC side, it has a foundation of many years of cooperation with Qualcomm, provides operating system-level software support for AIPC and AI phones, and actively explores new opportunities for vehicle operating systems, industrial robots, and end-side intelligence. It is a deep partner at the end side of Volcano Engine, maintaining a “buy” rating.

Risk warning: Large model iterations fall short of expectations; cooperation processes with relevant vendors fall short of expectations; AIPC progress falls short of expectations; there is a risk that public materials used in research reports may be delayed or not updated in a timely manner.