In February 2021, Iflytek Co.Ltd(002230) (002230. SZ) proposed to achieve the goal of "one billion users, 100 billion revenue and driving trillion industrial ecology" in the next five years at the enterprise annual planning conference.
Red Star capital Bureau noted that according to the target, Iflytek Co.Ltd(002230) needs to achieve a revenue of 100 billion yuan in 2025. According to the corporate financial report, the total revenue of Iflytek Co.Ltd(002230) in 2020 is 13.025 billion yuan. If you want to achieve the target, Iflytek Co.Ltd(002230) needs to achieve an annual growth of 45%.
This is obviously a big challenge for Iflytek Co.Ltd(002230) which has been established for more than 20 years. Iflytek Co.Ltd(002230) 's 100 billion revenue dream is blind self-confidence or winning?
(I)
What story is Iflytek Co.Ltd(002230) telling?
① duplicate Iflytek Co.Ltd(002230) business structure
Iflytek Co.Ltd(002230) was founded in 1999 by 18 students of China University of science and technology in the early stage, and soon obtained the help of Hefei municipal government to raise a total investment of 30 million yuan in three institutions. In 2001, Chaohu "half soup conference" Iflytek Co.Ltd(002230) officially determined to focus on the voice industry and break the monopoly of foreign companies on the Chinese voice market. Language related work Iflytek Co.Ltd(002230) has been doing for more than 20 years.
Iflytek Co.Ltd(002230) the early business is not far from us, including the oral evaluation system of Putonghua level test, RBT in the field of telecom value-added services, etc.
Iflytek Co.Ltd(002230) early business structure source: corporate prospectus
After several years of development, Iflytek Co.Ltd(002230) current business has shown diversified development. There are three main revenue sources: education, open platform and consumer business, and smart city.
According to the annual report of the enterprise in 2020, in 2020, the income in the field of education accounted for 32.14% of the total revenue; Smart city business accounted for 29.46% of the total revenue; The open platform and consumer businesses accounted for 23.65% of the total revenue, and the three businesses accounted for more than 85% of the total revenue.
Source: company financial report, red star capital Bureau
These three business segments are specifically:
education field: the business is divided into products for the B (commercial) end and products for the C (consumer) end.
B-end oriented products refer to smart classroom teaching products. By constructing the overall architecture of "cloud platform end", we create a networked, data-based, interactive and intelligent campus learning environment to realize efficient lesson preparation before class, accurate teaching in class and intelligent marking and personalized learning after class. According to the 2020 annual report, by the end of 2020, smart classroom products had covered 34 provincial administrative units and more than 30000 schools.
The C-end oriented education product focuses on the field of k12 education and counseling, including the intelligent learning network that provides personalized learning manuals and serves students and parents; And iFLYTEK learning machine and other products and value-added services.
smart city: these products are mainly for the G (government) end, including products related to smart police, smart court, smart prosecution and political and legal coordination platform; For example, when the court adjudicates a case, it helps to record the trial and assist in the rapid opening of simple and quick cases, so as to improve the trial efficiency.
open platform and consumer field: open platform refers to the intelligent voice and artificial intelligence capabilities and solutions that use iFLYTEK open platform for customers in operators, finance, automobile and other industries. According to the financial report, as of December 31, 2020, the number of biological partners of iFLYTEK open platform was 2.7 million, the total number of developers was 1.75 million, and the total number of applications was about 996000; Consumer business mainly refers to hardware products such as iFLYTEK recorder, iFLYTEK office book and iFLYTEK translator.
IFLYTEK open platform architecture; Source: iResearch consulting
To sum up, Iflytek Co.Ltd(002230) currently has a large number of products, with layout for g-end, b-end and C-end, and involves both hardware and software.
Business concept of ② Iflytek Co.Ltd(002230)
Returning to the "100 billion goal" mentioned at the annual planning conference above Iflytek Co.Ltd(002230) , founder Liu Qingfeng predicted that about 1 / 3 of them came from education business; 1 / 3 comes from digital economy transformation business, such as e-government, medical treatment, justice and other fields; Another third comes from consumer products.
Liu Qingfeng believes that the driving force for Iflytek Co.Ltd(002230) revenue to exceed 100 billion mainly comes from two points: first, the application of education and medical treatment crosses the economic cycle and is basically just needed. Every year, 4% of China's GDP is invested in education and 6% - 7% in health care. In the post epidemic era, the country needs to use artificial intelligence technology to make up for the shortcomings of grass-roots medical treatment and carry out intelligent epidemic prevention and control. The development path of education and medical business of Iflytek Co.Ltd(002230) is in line with the trend of macroeconomic development.
Secondly, the transformation of digital economy itself is good for the artificial intelligence industry. In the artificial intelligence industry, although there are some new Unicorn companies, these companies only do single point technological innovation, and their comprehensive strength and brand credibility have not been built. Therefore, it is difficult to do major projects in the era of digital economy transformation, from which Iflytek Co.Ltd(002230) can obtain opportunities.
However, the Red Star capital Bureau noted that Iflytek Co.Ltd(002230) has been working for 22 years, with a revenue of about 13 billion yuan in 2020. Relying on two driving forces and three revenue components, Iflytek Co.Ltd(002230) it is very difficult to achieve revenue of more than 100 billion in five years. Let's take a look at the current business situation and possible obstacles in the future.
(II)
from the financial report Iflytek Co.Ltd(002230) "technology" background
① the growth rate of revenue increased, but the gross profit margin decreased significantly
From the change of total revenue of Iflytek Co.Ltd(002230) , according to the company's financial report, the revenue growth rate of Iflytek Co.Ltd(002230) decreased significantly from 2017 to 2019. In 2017, the total revenue was RMB 5.445 billion, and the revenue growth rate was 63.97%; In 2019, the total revenue was RMB 10.079 billion, with a revenue growth rate of 27.3%; In 2020, the growth rate of revenue increased slightly; In the first three quarters of 2021, Iflytek Co.Ltd(002230) had a total revenue of 10.868 billion yuan, with a revenue growth rate of 49.2%, showing a significant increase, but the long-term nature remains to be observed.
Source: corporate financial report, red star capital Bureau
Generally speaking, the gross profit margin can more intuitively reflect a company's competitiveness in the market, but in recent years, the gross profit margin of Iflytek Co.Ltd(002230) has been in a downward trend.
From 2017 to 2020 and the first three quarters of 2021, Iflytek Co.Ltd(002230) gross profit margin was 51.38%, 50.03%, 46.02%, 45.12% and 43.12% respectively.
Source: corporate financial report, red star capital Bureau
The gross profit margin continues to decline, indicating that Iflytek Co.Ltd(002230) may face no small challenge in its ability to "make money" in the future; In terms of business, the gross profit margin in the main education fields is currently high, more than 50%; The gross profit margin of smart city, open platform and consumer business is about 30%. Other businesses will not be discussed for the time being because they make little contribution to revenue.
Overall, Iflytek Co.Ltd(002230) has a wide range of products and a wide range of single business gross profit margin. However, except for the education sector that has been deeply cultivated for many years, the market competitiveness of other business sectors is not strong.
② over reliance on government subsidies, "giant" or "giant baby"
The profit of Iflytek Co.Ltd(002230) has always been inseparable from the support and help of the government.
According to the company's financial report, from 2017 to 2020 and the first three quarters of 2021, Iflytek Co.Ltd(002230) net profit was RMB 435 million, RMB 542 million, RMB 819 million, RMB 1364 million and RMB 729 million respectively; The government subsidies received were 77 million yuan, 276 million yuan, 412 million yuan, 426 million yuan and 225 million yuan respectively; Government subsidies accounted for 17.8%, 50.9%, 50.3%, 31.2% and 30.9% of net profit respectively.
Source: corporate financial report, red star capital Bureau
In other words, half of the net profits of Iflytek Co.Ltd(002230) in 2018 and 2019 came from the "help" of the government, and more than 30% of the net profits of Iflytek Co.Ltd(002230) in 2020 and the first three quarters of this year also came from government subsidies. Iflytek Co.Ltd(002230) behind the seemingly gorgeous net profit growth, there is also a lot of "water".
③ science and technology enterprises, technology priority or marketing priority
Iflytek Co.Ltd(002230) has always been regarded as a technology giant, but the financial report shows that the enterprise once paid much more attention to marketing than R & D, which also makes Iflytek Co.Ltd(002230) This "technology giant" quite questioned.
According to the company's financial report, the sales expense of Iflytek Co.Ltd(002230) in 2017 was about twice the R & D investment; According to the financial report of 2020, Iflytek Co.Ltd(002230) the annual R & D expenses were 2.211 billion yuan, a year-on-year increase of 34.86%, and finally exceeded the sales expenses of 2.084 billion yuan in amount; After that, it seems that the University of science and technology news also increased its R & D investment. In the first three quarters of 2021, Iflytek Co.Ltd(002230) R & D expenses were 2.022 billion yuan, and the sales expenses in the same period were 1.656 billion yuan.
Source: corporate financial report, red star capital Bureau
Although enterprises have adjusted the weight of R & D expenses and marketing expenses, the proportion of R & D expenses to total revenue in the first three quarters of 2021 is 18.61%, compared with 22.43% in the same period of 2020; This also shows that the R & D investment of Iflytek Co.Ltd(002230) has not kept up with the growth of revenue to a certain extent.
(III)
Iflytek Co.Ltd(002230) what are the difficulties in "achieving the goal"?
① in the education sector, new and old competitors crowded the track
The education business of Iflytek Co.Ltd(002230) is the main revenue source of the company. Founder Liu Qingfeng also expects that about 1 / 3 of the "100 billion income plan" will come from the education business.
However, it is difficult to achieve this goal. In the b-end business, Iflytek Co.Ltd(002230) has a leading advantage, but the technical barrier of the business itself is not high. Now the leading Internet giants can become strong competitors of Iflytek Co.Ltd(002230) in the b-end education sector. For example, Tencent (Tencent Holdings 00700. HK) announced at the digital ecology conference held in November this year that Tencent education has served the education authorities of more than 1000 provinces, cities, districts and counties, It covers more than 100000 schools and more than 450 million users. In addition, as far as the business itself is concerned, it also faces many uncertainties, such as long account cycle, policy changes and so on.
From the C-end market of Iflytek Co.Ltd(002230) education business, there are two types of realization channels, namely, the sale of iFLYTEK learning machines, the provision of personalized learning manuals, the intelligent learning network serving students' parents, value-added services, etc.
According to the data released by IDC, it is expected that the number of student tablets will reach 4.7 million in 2021, but in fact, the competition in the learning machine market is also extremely fierce. There are old players Better Life Commercial Chain Share Co.Ltd(002251) , Youxue school, xueshulang, etc. who have been deeply involved in this field for many years. At the same time, Alibaba (Baba. Us; 09988. HK), byte beating, Tencent and other major technology and Internet manufacturers have also made layout for a long time.
According to the data compiled by the forward-looking economist from tmall mall, in 2020 Better Life Commercial Chain Share Co.Ltd(002251) will be far ahead in the trading volume and market share of learning machines by virtue of the advantages of core educational resources and long-term brand influence; Iflytek Co.Ltd(002230) can only be counted as the second echelon player at present.
Source: prospective industry research institute
Offline, Iflytek Co.Ltd(002230) is not the opponent of these old learning machine enterprises in terms of channel construction and user training.
② consumer goods business is difficult to occupy users' minds, and AI war is imminent
Iflytek Co.Ltd(002230) in the "100 billion plan", we are also optimistic about the consumer goods business, which can be divided into tool consumer goods, such as translator, recorder, office book, etc; And content-based consumer goods, such as speakers, TV set-top boxes, smart headphones, etc.
However, at present Iflytek Co.Ltd(002230) has not formed a closed-loop product ecological chain, nor mastered the flow entrance of consumption scenarios. At the same time, it is also inferior to its competitors in terms of cost performance. The later market competitiveness remains to be discussed.
For example, in terms of intelligent recorder, the colorful version of intelligent recorder released by Sogou in August 2019 has more price advantages than the youth version of recorder sr301 released after Iflytek Co.Ltd(002230) .
In addition, in AI, the implementation of AI concept is the primary problem of many AI companies. Giant bat (Baidu, Alibaba and Tencent) has mastered the absolute traffic advantage in this war, and has long had a layout for it.
Baidu ranks fourth in the top 20 list of global artificial intelligence enterprises in the 2019 white paper on artificial intelligence development, covering many fields such as intelligent public transportation, automatic driving, intelligent car coupling and so on; Taking advantage of the natural traffic advantages of e-commerce and payment, Alibaba has established Alibaba cloud, Dharma Institute and pingtouge to improve its layout on AI; Tencent built the AI Lab in 2016 and achieved some results in the AI layout in medical treatment, finance and other aspects.
At the same time, the strength of "Ai four little dragons" in Shangtang, Kuangshi, Yuncong and Yitu can not be underestimated. It can be said that "stars gather" in the AI war.
summary:
Iflytek Co.Ltd(002230) has many businesses and layout for enterprises, governments and users, but Iflytek Co.Ltd(002230) seems difficult to find a core foothold to dominate the Jianghu. The cake of artificial intelligence seems huge, but competitors are also fierce. The 100 billion revenue dream of Iflytek Co.Ltd(002230) may really need to be riveted, but at present, it is still not optimistic.
(Red Star capital Bureau)
