\u3000\u3000 Hangzhou Arcvideo Technology Co.Ltd(688039) (688039)
Event: the company recently signed a product sales contract with Yichao (Asia Pacific) Co., Ltd. on “technical fit out for Al Arab television network wll (lusail tower, Doha Qatar)”, with the contract amount of USD 17931665.76.
The landing of tens of millions of dollars of overseas large orders has brought good performance, which once again confirms the company’s global leading position in the field of video processing core technology. The implementation of large-scale contracts of more than US $17 million (the contract amount between the company and the agent Yichao in the past 2018-2020 was only RMB 1.69 ~ 11.85 million), will not only have a positive impact on the company’s operating performance in 2022 and promote the continuous implementation of the company’s global market development, but also confirm the company’s global leading position in the field of core technology of video processing.
The company is a participant in the formulation of a number of audio and video standards in China and a technical navigator under the wave of domestic substitution. Overseas H.26X standards are charging disorderly, which hinders the development of China’s UHD industry. AVS has achieved breakthrough in domestic standards, and the company is the core participant in the formulation. China’s first HDR video standard, HDR video, was verified on the ground. The company participated in the drafting. On November 23, 2021, the company has taken the lead in launching the “8kavs3hdr video encoder”, which is perfectly compatible with HDR video.
China Central Television is the touchstone of professional products. The company has successfully entered the supplier system of China Central Television. CCTV is the touchstone of the performance of professional audio and video track products. In the past era of standard definition and HD, overseas head manufacturers such as Tandberg and harmonic were basically in a monopoly position. The company’s CpG + GPU coding scheme gradually showed its comparative advantages, began to penetrate into the system of China Central Television, began to provide the construction of China Central Television’s ultra-high definition 4K test channel (4kavs2 equipment and solutions will be provided in October 2018), the pilot launch project of China Central Television’s 8K channel, the live broadcast of the 2019 National Day military parade, the 8K live broadcast of China Central Television’s Spring Festival Gala in 2021 2021 European Cup, 2021 Tokyo Olympic Games live broadcast, etc., and slowly grow from backup manufacturer to main coding manufacturer.
Attack from many sides and open the growth ceiling. The company joined hands with Tencent, iqiyi, Youku and other Internet manufacturers to increase cooperation with ultra-high definition industrial parks. In the pan security industry, relying on “video coding and transcoding” and “intelligent AI identification” technologies, the company reduced the video transmission bandwidth (the bit rate was compressed to 1 / 10, leading other manufacturers for at least one to two years), continued to implement projects and opened the company’s long-term growth space.
Profit forecast and investment suggestions: we believe that the company has accumulated profound video core technology in many scenes through continuous R & D reserves, with a typical “geek” style. The signing of this contract will further boost the company’s future performance. We revised the profit forecast, and it is expected that the company will achieve an operating revenue of 498 million yuan from 2021 to 2023 RMB 788 million and RMB 1039 million, realizing net profits attributable to the parent company of RMB 132 million, RMB 215 million and RMB 292 million, maintaining the “buy” rating.
Risk tips: technical risks; The progress of industrial investment and policy implementation is lower than expected; The bad debt risk of accounts receivable has increased; Income seasonal risk.
