Continued high R&D intensity, 2023 performance under pressure

According to the company's 2023 performance forecast, it is expected to achieve operating income of 882-945 million yuan, and net profit to mother with an estimated loss of 356-435 million yuan. The company's revenue remained stable, with a slight increase over the same period last year. Among them, the revenue from the dedicated short-range communication business and the revenue from the intelligent networking business both increased by more than 20% over the previous year. The main reasons for the year-on-year decline in the company's net profit are: (1) Adhering to a long-term strategy, maintaining investment in innovation, and continuing to increase investment in the market and R&D of new products such as lidar and intelligent connectivity, and R&D expenses have increased significantly. (2) Prices of some products declined in 2023, which affected the overall gross profit margin. (3) Affected by factors such as the slowdown in economic growth, the company's repayments were affected, and the amount of preparation for bad debts and inventory impairment increased year-on-year.

Vehicle-road cloud integration is poised to move from silos to large-scale

In recent years, vehicle-road collaborative autonomous driving has entered a stage of rapid development. Facing the industrialization challenges of bicycle intelligence, the industry is actively exploring the integrated development path of intelligence and connectivity.

With the release of the five departments' “Pilot Work on the Application of “Vehicle Road Cloud Integration” policy, “vehicle-road cloud integration” has become an important support for improving China's new quality productivity, and the digitalization of transportation is about to usher in new changes. The list of key tasks in this year's Beijing Municipal Government work report suggests that it is necessary to complete the 3.0 phase of the construction of a high-level autonomous driving demonstration zone, expand the area to 600 square kilometers, and launch the 4.0 phase. Currently, vehicle-road collaboration is in the initial expansion stage from point to point, from “isolated islands” of individual pilots to large-scale, bringing more market space.

Intelligent connectivity creates a second growth curve

The Wanji Intelligent Connected Solution (C-V2X) empowers autonomous vehicles and provides comprehensive real-time data at complex intersections to make driving safer. The company has launched comprehensive vehicle-road collaboration solutions for smart highways and dual-smart cities. It has rapidly expanded the market in the past two years, won bids for several projects, built typical projects such as Chongqing Yuxiang Smart Expressway and Yunnan Zhaoyang Smart Expressway. It has been deeply involved in the construction of the Wuhan Intelligent Connected Vehicle Test Site and the Qingdao High-tech Zone Intelligent Connected Vehicle Test Road Test Road, and the construction of vehicle-road collaborative autonomous driving test sites in universities such as Chang'an University, Tongji University, and Qinghai Jiaotong University. At the same time, it also led the formulation of industry standards and applied for a number of scientific research patents.

It has the ability to develop a full stack of autonomous driving algorithms

The company's autonomous driving has the ability to develop a full stack of sensing, positioning, planning and control algorithms.

In 2023, the company's autonomous driving made new progress in sensor sensing kit development, domain controller software and hardware development, real test site scenario simulation, and vehicle-road cloud integration. In terms of sensor sensing kit development, the company developed sensor sensing kits based on self-developed lidar sensors, realized three different lidar configuration schemes and adaptations for various models, and deployed the latest lidar sensing software modules; in terms of domain control software and hardware development, the company developed perception algorithm software, planning and control algorithm software, data recharge software, and virtual traffic flow generation functions based on self-developed domain controllers; in terms of simulating real test site scenarios, the company developed parallel inference software, shadow mode software and virtual reality fusion software; in vehicle road cloud In-depth exploration of integration has been carried out, opening up scenarios such as vehicle-road collaborative sensing, vehicle-road cloud traffic information interaction, vehicle-road cloud collaborative decision control, and real-time rendering in the cloud.

A Korean subsidiary was established, and the international layout continues to be deepened

Recently, the company officially announced the establishment of a Korean subsidiary and signed a C-V2X cooperation agreement with LAON ROAD, a Korean smart crossing partner. On March 29, the company and Korea's ChasyRobotics Company signed a Memorandum of Understanding (MOU) to establish Wanji Korea to work together to provide high-quality lidar and excellent customer service to Korean robotics and automotive customer groups. The cooperation will further promote the large-scale application of the company's high-quality lidar and intelligent transportation solutions around the world. In 2023, in terms of industrial mobile robot lidar, the company actively expanded overseas markets and achieved sales in Europe, America, Southeast Asia, etc. In the new phase, the company uses Korea as a key market for overseas development, and has received orders from many Korean head robot (AMR) customers, achieving new breakthroughs in overseas markets.

Solid-state lidar card position advantages are outstanding

Join hands with the Institute of Semiconductors of the Chinese Academy of Sciences to seize the high ground in lidar technology. The company is forward-looking to develop an all-solid-state lidar OPA, which is a scarce solid-state lidar target in the A-share market, and has outstanding card position advantages. The company cooperated with the Institute of Semiconductors of the Chinese Academy of Sciences to carry out research and development of all-solid-state silicon-based phased array lidars. Related R&D projects received support from the National Natural Science Foundation of China in 2019, and received national funding for key projects in the field of silicon-based lidar chips.

Investment advice

The company's 2023-2025 EPS is expected to be -1.76, 0.20, and 0.76 yuan, respectively, and the PE corresponding to the current stock price is -13.49, 117.20, and 31.33 times, respectively. The company is a leading enterprise in the smart transportation industry. It continues to increase R&D investment in fields such as lidar and intelligent connectivity, and is actively implementing vehicle networking solutions. The intelligent connectivity business is expected to usher in rapid growth. The company's performance is expected to improve in 2024 and maintain a “buy” rating.

Risk warning:

Product development progress falls short of expectations; market competition increases risk; technology implementation falls short of expected risk.