Incidents:
On April 30, 2025, the company stated that the company was the drafting unit of AECS and was previously the main supplier of e-Call for its own brands overseas.
On April 24, the company released its 2025 quarterly report: 2025Q1. The company's revenue was 0.216 billion yuan, up 16.85% year on year; net profit to mother was 0.043 billion yuan, up 30.67% year on year; net profit after deducting non-return to mother was 0.042 billion yuan, up 35.18% year on year.
On April 20, the company released its 2024 annual report: in 2024, the company achieved operating income of 1.022 billion yuan, a year-on-year increase of 25.68%; net profit to mother 0.175 billion yuan, up 37.54% year on year; net profit after deducting non-return to mother 0.17 billion yuan, up 37.04% year on year.
Key investment points:
Net profit CAGR of 47% in 2019-2024, increased shipment volume+product iteration driven growth
In 2019-2024, the company's operating income CAGR was 30.01%, and net profit CAGR to mother was 47.44%. With 2024Q4, the company achieved operating income of 0.287 billion yuan, a year-on-year increase of 10.30%; net profit to mother was 0.041 billion yuan, an increase of 18.06% over the previous year; net profit not attributable to mother was 0.039 billion yuan.
On the one hand, the company's business growth was due to a significant increase in shipment volume, which led to a continuous expansion of the business scale; on the other hand, rapid product iteration and renewal led to a decrease in unit product cost, which in turn increased the overall gross profit margin. By business, 1) Connected Vehicle Terminal Equipment: 2024, revenue of 0.842 billion yuan, YoY +32.19%, accounting for 82.39%, gross profit margin 27.71%, YoY +2.74pct; 2) IoT Smart Modules: 2024, revenue 0.136 billion yuan, -6.73% YoY, accounting for 13.28%, gross profit margin 24.77%, YoY -0.45pct.
The effect of cost control is showing, and the net interest rate continues to grow
In 2024, the company's gross profit margin was 29.07%, +2.05pct; the company's sales/management/R&D expenses ratio was 0.81%/2.94%/6.51%, respectively, -0.70pct/+0.16pct/-0.15pct; net profit margin was 17.17%, +1.48pct year on year. 2025Q1, the company's gross profit margin was 29.33%, +2.24pct year on year, net profit margin 20.02%, +2.12pct year on year; the company's sales/management/R&D expenses ratio was 0.89%/2.25%/7.79%, respectively, +0.09pct/-0.52pct/+0.65pct year on year.
In 2024, the company adhered to the development concept of scientific and technological innovation and adopted the “platform-based and modular” technological innovation concept to form a product technology architecture with platform iteration and in-depth module development capabilities; the company continued to increase R&D investment. In 2024, the company's R&D expenses reached 66.5601 million yuan, an increase of 22.84% over the previous year.
The penetration rate of the Internet of Vehicles has increased. The company continues to develop the automotive industry with the advantage of R&D and customer base. Under the trend of intelligence and connectivity, the Internet of Vehicles penetration rate continues to rise, and the market size of the industry is growing rapidly. According to the “2023-2028 China Vehicle Networking Special Research and Development Prospect Forecast and Evaluation Report” issued by the China Business Industry Research Institute, the global connected car market will increase to 228.1 billion US dollars in 2024, and the size of China's connected car market will reach 543 billion yuan in 2024.
Since its establishment, the company has focused on wireless communication technology research and development, embedded software and hardware development, technical services, etc., and has accumulated rich industry experience and first-mover advantages, and has capabilities such as R&D innovation, comprehensive capabilities, high-quality customer base, and international certification experience. The company's products and services have been introduced to SAIC Motor Group, Chery, Geely, BYD, etc. Some products are exported to overseas markets such as the European Union, the United Kingdom, and Japan on its own brand models to help Chinese cars go overseas.
Profit forecast and investment rating: The company is committed to providing smart vehicle and industrial IoT customers with intelligent connectivity solutions, and is expected to benefit from the rapid growth opportunities brought by autonomous driving and related policy promotion. The company is expected to have an operating income of 1.339/1.705/2.126 billion yuan in 2025-2027 and a net profit of 0.238/0.308/0.377 billion yuan. The PE corresponding to the current stock price is 49/38/31X, which is covered for the first time, giving it a “buy” rating.
Risk warning: market competition risk, risk of high concentration of major customers, risk of product development and technological innovation, risk of fluctuating business performance, international trade policy risk, etc.
