Valuation confusion of “hard technology” — Taking Shangtang technology as an example
Hard technology is the basic core technology at the bottom, which is related to the national economy and the people’s livelihood and the comprehensive competitiveness of the country in the future. How to value hard technology has also been considered by the capital market for a long time. Taking the opportunity of the listing of AI giant Shangtang, we think about this problem again and take Shangtang technology as an example to discuss the “valuation of hard technology”. Shangtang technology experienced 12 rounds of financing before its listing, with a valuation of US $12 billion. At the beginning of listing, the valuation given by securities companies was generally about 100 billion yuan, but since listing, its share price has risen rapidly by 78% and its market value has reached 228.3 billion yuan. From the perspective of performance, from 2018 to 2020, the operating revenue of Shangtang technology increased from 1.85 billion yuan to 3.45 billion yuan, and the CAGR was 36%; The net profit loss expanded from – 3.42 billion yuan to – 12.16 billion yuan. Obviously, the market has widespread doubts about its high market value.
How to view the valuation of “hard technology” enterprises
Before and after the listing of most leading technology enterprises, the market will be confused about their valuation. In particular, such technology enterprises are often in a state of long-term loss in the initial stage of listing. If we only understand it from the perspective of huge R & D investment, it is not deep enough. After the recent listing of Shangtang, the CEO’s view is still quite enlightening: Shangtang is moving from the “indomitable” stage to the “overwhelming” stage, that is, Shangtang is moving towards the stage of substantial cost reduction, so as to realize large-scale commerce. In fact, this is also consistent with our view on the valuation of science and technology frontier enterprises, that is, science and technology enterprises need a stage to cross the “gap”, and advanced technology needs to cross a huge gap from generation to application and then to large-scale business, and the critical point is the sharp decline of its cost. The cost of Shangtang has decreased 300 times in the past three years, but it is far from enough. Next, smart city, smart commerce, smart cars and industrial Internet with broader space are huge market space that can be expected. From the valuation point of view, it is of little significance to talk about whether or not the market value of these AI leading enterprises has a bubble. We should look at and analyze them dynamically and pay more attention to the growth of such enterprises after striding across the gap. If the cost drops to a critical point: 1) vertically, the company’s business is expected to make profits in multiple application fields and break out rapidly; 2) Horizontally, the company can quickly cover multiple industries and expand market space with the core ability of artificial vision AI.
Investment advice
If this year is a structural style of investment around the “hard technology” of “specialization and innovation”, we suggest to look at the valuation of science and technology enterprises from a more dynamic and flexible perspective, focusing on the construction of their core competencies, the decline of product costs, and the scalability of applications.
Suggested concern
Smart car: Thunder Software Technology Co.Ltd(300496) , Arcsoft Corporation Limited(688088) , Huizhou Desay Sv Automotive Co.Ltd(002920) , Autel Intelligent Technology Corp.Ltd(688208) , China Transinfo Technology Co.Ltd(002373) .
Industrial software: Runa Smart Equipment Co.Ltd(301129) , Zhejiang Heda Technology Co.Ltd(688296) , dingyang technology, Shanghai Baosight Software Co.Ltd(600845) .
Artificial intelligence: Pci Technology Group Co.Ltd(600728) , Iflytek Co.Ltd(002230) , Zhejiang Dahua Technology Co.Ltd(002236) , Hangzhou Hikvision Digital Technology Co.Ltd(002415) , Opt Machine Vision Tech Co.Ltd(688686) . Fintech and Xinchuang: Grg Banking Equipment Co.Ltd(002152) , Yusys Technologies Co.Ltd(300674) , Hundsun Technologies Inc(600570) , Inspur Electronic Information Industry Co.Ltd(000977) , China Greatwall Technology Group Co.Ltd(000066) .
Risk tips
1) the epidemic situation intensifies and reduces enterprise informatization expenditure; 2) Fiscal and monetary policies are lower than expected; 3) The supply chain fluctuation increases, affecting the development of science and technology industry.
