The only artificial intelligence unicorn with a purely domestic background in China. Yuncong Technology, founded in 2015, is an artificial intelligence company that provides efficient man-machine cooperative operating systems and industry solutions. The company is committed to promoting the industrialization process of artificial intelligence and the transformation and upgrading of intelligence in various industries. On the one hand, the company has built a man-machine cooperative operating system by relying on the independently developed core technology of artificial intelligence, and grasps the core entrance of artificial intelligence ecology through the comprehensive connection of business data, hardware equipment and software applications. to provide customers with information, digital and intelligent artificial intelligence services. On the other hand, based on the man-machine collaborative operating system, the company can provide industry solutions with artificial intelligence technology as the core for a wider range of customers, such as smart finance, smart governance, smart travel, smart business and other application scenarios. According to the company's prospectus, the company's ownership structure is made up of domestic capital, and the company calls itself "the only wholly domestic artificial intelligence unicorn enterprise" on its official Wechat account. We believe that at a time when the importance of self-control is increasing, the future development of AI leaders such as companies with pure domestic investment is full of momentum.
Scarce AI platform enterprises, card position man-machine cooperative operating system, enable the whole industry. The company adheres to the concept of open man-machine collaborative development and co-builds and shares with upstream and downstream independent hardware suppliers, independent software suppliers, platforms and industry application providers. The unified aspect of the company's man-machine cooperative operation system includes a variety of man-machine collaborative application products and overall operating systems provided according to the needs of customers in different application scenarios, serving the improvement of customer single-point business efficiency and the intelligent upgrade of the overall business scene; on the other hand, it also includes a lightweight and fully functional "canoe platform"
(that is, general service platform), through the open introduction of ecological partners to jointly develop AI applications and supporting SaaS services, so that artificial intelligence services can benefit a wider range of customers in various industries. We believe that through the man-machine cooperative operating system, the company is expected to achieve the empowerment of the whole industry, greatly opening up the business space and profit ceiling. At present, the company has achieved a certain leading edge, according to the financial network, the world's AI head companies are basically in the income level of more than 1 billion, China's AI field platform enterprises only 2-3. We believe that the company has met both "1 billion revenue" and "platform enterprises". As a scarce AI platform leading enterprise in the industry, the company has broad prospects for development in the future.
The AI model production of the company takes the lead in both quantity and quality. In the aspect of AI model production, the man-machine cooperative operating system optimizes the training process by introducing core technologies such as data pre-tagging, automatic parameter space search, knowledge distillation and self-feedback, improves the production efficiency of AI algorithm model, greatly reduces the technical threshold of algorithm production and intelligent application development, significantly improves the R & D efficiency and product quality, and shortens the algorithm production cycle from the past few weeks to several hours. In the aspect of AI self-learning, the company creatively landed a set of self-learning subsystem in business practice, using NLP and knowledge graph technology combined with industry knowledge to convert system feedback information into effective re-training samples through the customer business system, and continuously improve the model effect in the process of operation. The company takes the lead in self-learning technology in Chengdu "Tianfu brain" project, Guangzhou "Nansha District artificial Intelligence Unified Service platform" and other projects, and the effects of face recognition and OCR recognition algorithms can be improved automatically with the operation of the system. We believe that the company currently has efficient AI production capacity, while the self-learning system continues to enhance the effect of the company's model, thus achieving the company's AI production in both quantity and quality.
The company has full-chain technical capabilities and a strong R & D system to lay the foundation for future development. The company has the full-chain artificial intelligence core technology covering perception, cognition and decision-making, and integrates a variety of technologies into the man-machine cooperative operating system to form a technical closed loop to solve the complex intelligent needs in customer application scenarios. The technical strength is in a leading position in the industry, and the cross-mirror tracking technology independently developed by the company won the first national artificial intelligence competition. 3D face reconstruction, OCR, voice and other technologies have set new records in the world's authoritative data sets, while papers in the fields of deep learning and visual recognition have been published in top international conferences and journals in the field of artificial intelligence. The company and its core technical team have won the crown in the field of intelligent perception at home and abroad for 9 times, and won the first prize of Wu Wenjun artificial Intelligence Science and Technology Progress Award in 2018. The company has been invited to participate in 30 national and industry standard formulation work, and at the same time undertakes the national major project construction tasks such as "artificial Intelligence basic Resources Public Service platform" and "industrialization and Application Project of High accuracy face recognition system", "industrialization Application of High accuracy face recognition based on self-developed SoC Chip" by the Ministry of Industry and Information Technology. At present, the company has built five major R & D centers and mature technology R & D teams. by the end of 2021, the number of R & D personnel has reached 575, accounting for 51.34% of the total employees. We believe that the company is currently in the lead in technology and has a strong R & D strength, which has laid a solid foundation for the sustainable development of the company's technology in the future.
The performance is growing steadily, and the turnaround point will come in a few years. The company's revenue from 2018 to 2021 was 484 million yuan, 807 million yuan, 755 million yuan and 1.076 billion yuan respectively, maintaining an overall growth trend. At present, the company is still in a state of loss, with net profits of-181 million yuan,-640 million yuan,-813 million yuan and-632 million yuan respectively from 2018 to 2021. The company expects to make a profit when the operating income reaches about 4 billion, the comprehensive gross profit margin remains at about 50%, and the expense growth rate maintains a sustained and steady downward trend during the period. According to the specific forecast, the time point for turning losses into profits is expected to be 2025. In terms of gross profit margin, from 2019 to 2021, the gross profit margin of the company's main business was 38.89%, 43.21% and 36.76% respectively, which fluctuated to some extent, but the company predicted that the gross profit margin of each segment of the business would continue to increase from 2022 to 2025. We believe that the company's performance is expected to maintain a trend of rapid growth in the future, superimposed by the continuous improvement of gross profit margin, the company is expected to quickly get out of the loss state.
Raise investment to upgrade and enrich the products, and continuously enhance the competitiveness of the company. The company intends to issue no more than 112.43 million shares in the initial public offering (before exercising the over-allotment option) RMB ordinary shares (A shares), and the funds raised after deducting the issuance fee It will be used for man-machine cooperative operating system upgrade project (total investment 813 million yuan), light boat system ecological construction project (total investment 831 million yuan), artificial intelligence solution integrated service ecological project (total investment 1.412 billion yuan) and supplementary working capital (total investment 693 million yuan). Among them, the man-machine cooperative operating system upgrade project aims to further enhance artificial intelligence technology and its supporting technologies in the fields of coverage perception, cognition and decision-making (such as human-computer interaction technology, data technology, system resource management and scheduling technology, etc.), enhance the competitiveness of the company's core technology, and lay a technical foundation for the ecological construction of the canoe system. Facing the development trend of a new generation of artificial intelligence technology, the light boat system ecological construction project will build an open platform for human-computer cooperation in the field of artificial intelligence. further enhance the company's technology accumulation in the technology platform (such as: cloud edge flexible deployment capabilities, one-stop developer service capabilities, etc.), gather more developers, suppliers, scientific research institutions and users, etc. Provide a rich range of products, scenarios and traffic for integrated services of artificial intelligence solutions. The artificial Intelligence solution Integrated Services Ecology Project aims at commercial landing applications in deep core high-end industries such as smart finance, smart governance, smart travel and intelligent commerce, through a wide range of products and technologies, provide data resources, scene feedback and value evaluation for man-machine collaborative operating systems, and promote the continuous improvement and evolution of the operating system. We believe that this investment is based on the company's existing main business and core technology, and is an upgrade and enrichment of the company's existing product platform. It is conducive to the company's technological innovation and product iteration, expand sales scale, increase market share and enhance core competitiveness.
Profit forecast assumptions:
1) Smart governance & digital new infrastructure: we believe that smart governance & digital new infrastructure industry is expected to develop rapidly with the promotion of digital economic policies in the future, and because government projects require higher qualifications and technical capabilities of manufacturers, the leading manufacturers in the industry will benefit more. As a leading platform manufacturer in the industry, we expect this business to maintain a steady growth trend in the future. From 2022 to 2024, the revenue growth of smart governance & digital infrastructure business will be 35%, 32% and 22%, respectively. At the same time, we believe that the company's future operating system product portfolio will gradually mature, and the proportion of operating systems in the revenue composition is expected to increase steadily, driving the increase in gross profit margin. We expect the company's smart governance & digital infrastructure business gross profit margin to be 40%, 43% and 45% respectively from 2022 to 2024.
2) Smart finance: we believe that smart finance is the company's advantage area, with the wide application of artificial intelligence products in banking, securities firms, insurance and other fields, it is expected that in the future the company will maintain rapid growth in banking system compliance, marketing, risk control and other areas, with strong potential for development. We expect the growth rate of the company's smart financial business revenue to reach a high level in 2022, and then gradually become steady as the scale expands and the industry penetration increases. The revenue growth rate of the smart financial business in 2022-2024 will be 95%, 80% and 40%, respectively. At the same time, the gross profit margin will remain basically stable, with gross profit margins of 45%, 46% and 47% respectively from 2022 to 2024.
3) Smart travel: we believe that the intelligent demand of the smart travel industry will continue to increase in the future, and the specific requirements will gradually change from intelligent hardware to intelligent platform and application software. We believe that the company has a first-mover advantage in intelligent system platform and software, and is expected to maintain high-speed development in the future. We expect the revenue growth of smart travel business to be 300%, 70% and 40% respectively from 2022 to 2024, and the gross profit margin will remain stable at the current level, with a gross margin of 44% in 2022-2024.
4) Smart business: at present, the revenue base of smart business is relatively small, the demand for digitization and intelligence of industry business will increase day by day in the future, and there are more opportunities for the company to expand business scenarios; and smart business scenarios have the characteristics of standardization and strong replicability, which is conducive to the rapid expansion of the company's business. We expect the company's smart business revenue to grow by 300%, 40% and 40% respectively from 2022 to 2024, and its gross profit margin will rise steadily to 53%, 54% and 55% respectively from 2022 to 2024.
Profit forecast and investment advice. We believe that, as an artificial intelligence platform company, the card position artificial intelligence industry ecological entrance, a wide range of downstream vertical industries, the company has three core advantages of technical power, productivity and commercial power, which is expected to drive the rapid development of the company's business in the future. We estimate that the company's revenue from 2022 to 2024 will be RMB 16.92 million, respectively. With reference to comparable companies, combined with the valuation of PSG and PS, we will give the company 15-17 times PS in 2022, corresponding to 57% revenue growth in 2022, with a PSG of 0.26-0.3 times; the market capitalization range is 253.8-28.76 billion yuan, and the corresponding reasonable value range is 34.27-38.83 yuan according to the 112.43 million shares issued this time.
Risk hint: the risk that the development of artificial intelligence technology is not as expected, and the digital economy policy is not as good as expected.
