Incident Overview

On August 23, Obi Zhongguang released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 0.213 billion yuan, an increase of 29.02% over the previous year; net profit to mother was 0.053 billion yuan, after deducting net profit of non-return to mother of 0.081 billion yuan, a significant reduction in losses compared to the same period last year.

High revenue growth combined with cost control, 24H1 loss narrowed drastically

On the revenue side, 2024H1 achieved revenue of 0.213 billion yuan (yoy +29%), which is the highest level since 2021 H1, indicating that the company's 3D vision technology has found large-scale application scenarios in the fields of offline payments, medical insurance verification, and 3D scanning. By region, the company's revenue from overseas in the first half of the year was 30.23 million yuan (yoy +45%), and the growth rate was higher than the overall level. 24H1 successfully introduced a senior overseas sales team, including former Intel RealSense sales leaders, core team members, robotics and computing platform experts. We expect the overseas market to become an important source of revenue growth in the future.

On the profit side, 24H1's losses have narrowed drastically. We think it is mainly due to active control of expenses. 24H1's R&D expenses and management expenses were 0.106 billion yuan (yoy -37%) and 54 million yuan (yoy -15%), respectively. The cost ratios of the two decreased by 52.15% and 12.84%, respectively, compared with the same period last year. We expect that as the company's revenue continues to grow, the effects of scale will begin to show, and the break-even path will gradually become clear.

Focusing on robot application scenarios, the company is expected to enter the fast track of development. Accurate perception of the real world is the core advantage of 3D cameras, but previously it was plagued by cost restrictions, and promotion progress was slow in scenarios where it was not immediately needed, and the rise of robots has broken this dilemma. Currently, the company has focused on robot-related application scenarios. 1) On the technical side, the company has built a “robot and AI vision industry center” and will continue to carry out R&D and technical research on topics such as robot vision sensors, AI visual perception and multi-modal interaction models, robot OS and cloud-based digital twin software platforms, mass production testing, and digital factories. 2) In terms of products, the company released the Gemini 335 and 336 series, which can be widely used in AMR, inspection robots, delivery robots, robotic arms, drones, human reconstruction and other robot and AI vision application scenarios. 3) On the customer side, in addition to achieving business cooperation with many domestic and foreign service robot customers such as Yunji Technology, Qinglang Intelligence, Purdue Technology, Gaoxian Robotics, and LionsBot in the field of service robots, the company has also adapted related products/solutions to some humanoid robot customers. Additionally, the company's Gemini 335 and 336 series have entered the Nvidia robotics platform. By integrating with the NVIDIA Isaac Perceptor, the company's 3D cameras can provide high-precision depth+RGB visual effects for their artificial intelligence-based perception workflows, suitable for autonomous mobile robots in indoor and outdoor environments.

Investment advice:

The company is the world's leading consumer 3D vision manufacturer. The full-stack layout card position advantage is obvious. As 3D vision sensors change from optional to mandatory, the company is expected to enter the fast track of development. We expect the company's revenue for 2024-2026 to be 0.52/0.845/1.224 billion yuan, respectively, and net profit to mother of -0.117/0.028/0.183 billion yuan, respectively. Maintaining the buy-A investment rating, the 6-month target price is 32.5 yuan, which is equivalent to 25 times the dynamic market sales ratio in 2024.

Risk warning:

1) The risk of iterative innovation in 3D visual perception technology; 2) the risk of downstream application scenarios falling short of expectations; 3) the risk of increasing competition in the industry; 4) the risk of losing talent in core technology; 5) the risk of falling short of expectations when assumptions fall short of expectations.