\u3000\u30 Beijing Telesound Electronics Co.Ltd(003004) 96 Thunder Software Technology Co.Ltd(300496) )
Event: Thunder Software Technology Co.Ltd(300496) issued the annual report for 2021 on March 4. In 2021, the company achieved an operating revenue of 4.127 billion yuan, a year-on-year increase of 57.04%; The net profit attributable to the parent company was 647 million yuan, a year-on-year increase of 45.96%; Net profit deducted from non parent company was 576 million yuan, with a year-on-year increase of 57.29%.
The performance in 2021 is in line with expectations, and the three businesses have achieved rapid growth
In 2021, the company achieved an operating revenue of 4.127 billion yuan, a year-on-year increase of 57.04%. In terms of regions, the company’s operating revenue in China was 2.543 billion yuan, a year-on-year increase of 72.22%, and the overseas operating revenue was 1.583 billion yuan, of which the revenue growth in Japan and Europe and the United States were 31.08% and 50.28% respectively. In terms of business: 1) in terms of intelligent software business, the company achieved revenue of 1.631 billion yuan in 2021, an increase of 40.33% over the same period of last year, of which the revenue from terminal manufacturers was 1.054 billion yuan, an increase of 47.88% over the same period of last year, and the revenue from chip manufacturers was 369 million yuan, an increase of 4.83% over the same period of last year. We believe that under the background that the global mobile phone shipments tend to stabilize and the market pattern of head manufacturers changes, the company’s business still maintains a high growth, which is mainly driven by the improvement of solution complexity and value. It is expected that with the continuous promotion of cooperation between the company and head customers, the smart software business will still be the cornerstone of the company’s revenue. 2) In terms of intelligent Internet connected vehicle business, the company achieved revenue of 1.224 billion yuan in 2021, an increase of 58.91% over the same period last year, including software development and technical service revenue of 1.082 billion yuan, a year-on-year increase of 72.87%; Software license revenue was 142 million yuan, a year-on-year decrease of 1.70%. We believe that the outstanding performance of the smart car business is mainly due to the vigorous prosperity of the downstream industry, the continuous rise of the penetration rate of the smart cockpit, and the superposition of the company’s accurate card position and the core track of “software defined car”. 3) In terms of intelligent Internet of things business, the company achieved a revenue of 1.272 billion yuan in 2021, with a year-on-year increase of 82.87%, mainly due to the sharp increase in shipments of intelligent hardware products such as Siasun Robot&Automation Co.Ltd(300024) , intelligent vision and XR and the continuous expansion of customers.
The gross profit margin is under pressure in the short term, and the subsequent stabilization and recovery can be expected
In 2021, the gross profit margin of the company decreased by 4.82pct, or 39.40%, compared with the same period of the previous year. We believe that the gross profit margin of the company has decreased to a certain extent, mainly due to: 1) the change of revenue structure, the high proportion of IOT business hardware, and the rapid growth of revenue, resulting in the decline of the overall gross profit margin; 2) The price of raw materials in the upstream has increased. Affected by the epidemic, the hardware cost and material procurement cost have increased significantly in 2021; 3) The input and output of some projects are mismatched in time. However, looking to the future, we judge that adverse factors such as rising raw material prices and pre investment will be repaired or digested with time and business progress. Therefore, we are optimistic about the stabilization and recovery of the company’s gross profit margin in the future. On the expense side, benefiting from the scale effect of the substantial growth of revenue, the company’s sales expense rate / management expense rate / R & D expense rate in 2021 were 3.12% / 9.85% / 12.43% respectively, down 1.03pct/0.12pct/2.90pct respectively compared with the same period last year.
Accelerate the layout of intelligent vehicle business, from cockpit to intelligent driving, from software to hardware and software solutions
In 2021, the company made great progress in the field of intelligent vehicles, both in business and performance. Looking forward to 2022, we are still optimistic about the growth of the company under the smart car track. On the one hand, during the recent ces2022 exhibition, the company released a new intelligent cockpit solution based on Qualcomm sa8295 hardware platform and kanzione, which supports the human-computer interaction design of a new generation of intelligent cockpit, further consolidating the advantages of intelligent cockpit. Furthermore, we believe that the subsequent growth logic of the company’s automobile business lies in: 1) moving forward from intelligent cockpit to intelligent driving. With the accelerated progress of Qualcomm in the field of intelligent driving, such as the acquisition of veoneer, the integration of the arriver platform, and the cooperation with BMW, GM and great wall, it is expected that the company, as an in-depth partner of Qualcomm, is expected to take the lead in benefiting from it, and is optimistic about intelligent driving taking over the intelligent cockpit, which will become the driving force for a new round of growth of the company’s automotive business. 2) Expand from software to hardware. According to the information disclosed by the company, the company established a subsidiary of Changhang intelligent driving in Suzhou, focusing on the development of automatic driving domain controller and high-performance computing platform, and is committed to providing software and hardware integrated automatic driving solutions. We believe that the core of the company’s entry into the high-performance computing platform lies in the card position. By grasping the core hardware of intelligent driving, we can create a complete set of intelligent driving solutions for operating system and algorithm software.
IOT business blossoms at many points and is expected to become the third growth curve of the company
In 2021, the company’s IOT business blossomed at many points, and continued to expand product shipments and customer expansion in the product fields of Siasun Robot&Automation Co.Ltd(300024) , UAV, smart camera, VR / XR, handheld terminal and so on. In addition to the steady growth of traditional intelligent hardware products, the company also began to layout the field of edge computing. The EB5 edge intelligent station released by the company in 2021 has been widely used in multiple intelligent scenarios by many customers, and the new high-cost Eb2 and high-performance EB6 edge intelligent station and modelfarm algorithm training platform were released at 2022ces exhibition. According to Gartner’s research, it is predicted that by 2025, the enterprise data generated and processed at the edge outside the traditional data center and cloud platform will jump from 10% in 2019 to 75% in 2025, and the demand for edge computing is expected to continue to expand. We believe that under the background of strong demand side, the standardized products created by the company are expected to seize the opportunity and become the third growth curve of the company.
Fixed growth points out the follow-up development direction, with dual efforts of smart cars and smart Internet of things
In addition to the 2021 annual report, the company also disclosed the 2022 private placement plan. According to the plan, the company plans to raise a total of no more than 3.1 billion yuan, which is mainly invested in R & D projects of vehicle operating system, R & D and industrialization projects of edge computing station, R & D and industrialization projects of extended reality (XR), R & D projects of distributed computing network technology and supplementary liquidity funds. In the field of intelligent vehicles, the company plans to lay out the next generation of intelligent vehicle operating system through the vehicle operating system R & D project, develop vehicle HPC system components, and develop mattrans intelligent vehicle operating system. It plans to invest 650 million yuan to raise funds. In the field of intelligent Internet of things, the company is committed to the R & D and industrialization of edge computing stations and the development of distributed computing network technology projects, with an investment of 1.005 billion and 185 million respectively to meet the needs of industrial users for computing upgrading and help them complete their intelligent transformation. In addition, the company plans to invest 360 million yuan in extended reality (XR) R & D and industrialization projects to consolidate and improve the technical strength of the company’s products in the development of XR technology.
Investment suggestion: the company fully benefits from the wave of intellectualization. With the operating system as the core, the product line for smart cars / mobile phones / Internet of things continues to expand, and the subsequent growth logic of the three businesses is clear. We expect that the company’s revenue from 2022 to 2024 will be 6.13/83.4/11 billion yuan respectively, and the net profit attributable to the parent company will be 8.92/12.14/1.597 billion yuan respectively, maintaining the Buy-A investment rating. As the company is still in the growth period, we give PE 70 times the net profit in 2022, corresponding to the six-month target price of 147.7 yuan / share.
Risk tips: 1) R & D investment is less than expected; 2) The demand for AR, VR and other equipment is lower than expected; 3) The penetration rate of intelligent Internet connected vehicles is lower than expected; 4) The impact of exchange rate fluctuations.
