\u3000\u3000 Pci Technology Group Co.Ltd(600728) (600728)
Main points:
The industry has profound accumulation and continues to invest in self-developed algorithms to realize the climb of the industrial chain
The company is one of the first enterprises to enter the smart city and smart rail transit, and has accumulated profound industry knowhow and scenario data. In terms of smart city, the company entered the field of public security in 2010, with projects covering more than 40 cities. In terms of smart rail transit, the company introduced the rail transit digital system from Singapore in 2004. At present, smart solutions for the whole subway line have been implemented in many cities. From 2018 to 2020, after removing ICT business, the company’s gross profit margin increased from 18% to 26%, realizing the climb of the industrial chain from integration to self research. We believe that the industrial chain climbing is the inevitable development of the company’s deep-rooted industry. Based on the scene landing ability, the company has formed the full link ability of algorithm, solution and project landing. In the future, with the increase of self-study proportion and the release of AI scenario demand, the company’s performance is expected to continue to increase.
Video AI technology is accelerated in many fields, and the performance inflection point brings investment opportunities with undervalued value
Thanks to the advantages of good adaptability and high precision, AI is accelerating its landing in many fields. From the perspective of the company, the company focuses on computer vision and digital twin Technology: 1) pay close attention to smart rail transit and smart city scenes. In terms of smart rail transit, the company applies AI technologies such as face recognition to create rich scene functions. In terms of smart city, it focuses on security and transportation. 2) Explore AI landing scenes in multiple directions. From 2019, the company began to layout digital twin and intelligent simulation technology, from perception to interaction and prediction, and its business involves new scenarios such as medical treatment and factory. Thanks to the synchronous development of supply and demand, the company’s revenue increased by 36% and net profit increased by 268% in the first three quarters of 2021. According to the unanimous expectation of wind, the company’s PE (2022e) is only 32, and the mismatch between performance growth and valuation brings greater investment value.
Refining technology from bottom to top and opening up the space for future growth in both horizontal and vertical directions
The company refines its core competence on the basis of deep landing experience in the industry. On the one hand, it deeply increases the investment in AI algorithm technology research and development; On the other hand, broaden the application scenarios horizontally. From a vertical perspective: 1) the company continues to increase investment in companies in the field of business collaboration in order to form a “cloud”, “edge” and “end” software and hardware product system. 2) Establish a central research institute, build a middle stage of AI, AR and data technology, and realize rapid iteration and reuse of technology. From a horizontal perspective, the company relies on the middle stage of three technologies and takes standardized algorithms as the core for rapid reuse. It is expected to form solutions covering multiple urban governance scenarios in the future.
Investment advice
With the accelerated implementation of AI + scenarios and policy catalysis, the company is expected to realize the rapid expansion of old scenes and new scenes with the help of industry experience and technology. We expect the company to achieve revenue of 6.1/76/9.5 billion yuan from 2021 to 2023, with a year-on-year increase of 42% / 25% / 25%; The net profit attributable to the parent company was RMB 320 / 600 / 830 million, with a year-on-year increase of 254% / 84% / 39%. It was covered for the first time and given a “buy” rating.
Risk tips
1) R & D breakthrough is less than expected; 2) Policy support is less than expected; 3) Project delivery was less than expected.
