Policies support the smart transportation industry to usher in a new round of construction peak. Wanji Technology has been deeply involved in intelligent connectivity for many years and has a leading edge in the field of “vehicle road cloud integration”. As relevant tenders are launched one after another in various regions, we believe the company is expected to enter a new boom cycle. First coverage, giving an “increase in wealth” investment rating.

With policy support, the smart transportation industry is expected to usher in a new round of construction peak. On March 13, the State Council issued the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-In”, which focuses on supporting the upgrading of transportation equipment. On January 17, five departments of the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of Natural Resources, the Ministry of Housing, Urban-Rural Development, and the Ministry of Transport jointly issued the “Notice on Launching the Pilot Application of “Vehicle Road Cloud Integration” for intelligent connected vehicles, focusing on 9 areas, including building intelligent roadside infrastructure, improving the assembly rate of vehicle terminals, and carrying out large-scale demonstration applications. On April 29, the Ministry of Finance and the Ministry of Transport decided to support and guide the digital transformation and upgrading of highway and waterway transport infrastructure through competitive review methods.

Bidding for “vehicle-road cloud integration” construction has been launched in many places, and various aspects of intelligent connectivity are expected to benefit. In June, cities such as Beijing, Fuzhou, Ordos, and Shenzhen successively announced “vehicle road cloud integration” construction projects. Among them, the investment scale of the Beijing project reached 9,939 billion yuan. The construction capital was 70% of the government's investment, and the state-owned enterprises raised 30% of their own funds. Beijing's 10 billion investment exceeded our expectations. 70% of the government's investment shows the country's determination to build an intelligent connected vehicle ecosystem. We believe that the “vehicle-road cloud integration” construction market space is broad. The “vehicle-road cloud integration” construction mainly includes intelligent roadside infrastructure, vehicle terminal assembly, city-level service management platforms, large-scale demonstration applications, geographic information services, etc. Among them, the scope of roadside infrastructure construction should be based on three categories of key areas, key intersections, general urban roads and regions to meet the requirements of integrated vehicle road cloud construction through software and hardware upgrades.

The company focuses on intelligent connectivity, and “vehicle-road cloud integration” brings new development opportunities to the company. The company has built a comprehensive vehicle-road collaborative ecosystem from the three main aspects of vehicles, roads, and clouds. On the automotive side, the company has built sensing and communication equipment such as in-vehicle lidars and vehicle-mounted V2X communication terminals to build capacity for autonomous vehicles and related algorithms; the road side has built a roadside intelligent sensing system with lidar as the main body, auxiliary AI video cameras, millimeter wave radar, edge computing units, etc., which can provide sensing services for vehicles through roadside RSU; on the cloud side, the company has built an intelligent connected cloud control platform to achieve functions such as digital twins, intelligent connectivity, and vehicle-road collaboration, etc., and mainly constructs visual services and data services for vehicle-road collaborative scenarios. Verify the viability of vehicle-road collaboration scenarios, and provide remote data and operation services for vehicles and roads through the cloud.

Covered for the first time, a “gain” rating was given. We expect the company to achieve revenue of 12.51, 19.56, and 2,949 billion yuan in 24-26, and net profit of 0.70, 1.94, and 308 million yuan, corresponding to PE137.7, 49.5, and 31.2 times PE. This is the first coverage, giving it an “increase in wealth” rating.

Risk warning: risk of performance fluctuations, risk of market competition, risk of new product development and technological innovation, risk of executive holdings reduction.