Jin Wu Financial News | According to the CITIC Construction Investment Research Report, in 2023, Shangtang (00020) achieved revenue of 3.406 billion yuan, a year-on-year decrease of 11%, and realized gross profit of 1,501 billion yuan, corresponding to a gross profit margin of 44.06%, a year-on-year decline, achieving a net loss of 6.44 billion yuan to the mother, an increase over the previous year. The company redivided the business segment and clarified the three major business directions: generative AI, traditional AI, and smart cars. Among them, generative AI revenue reached 1,184 billion yuan, up 200% year on year, accounting for 35% of the group's total revenue. The scale of traditional AI business was drastically reduced, revenue fell to 1,838 billion yuan, down 41% year on year, and smart car business revenue reached 384 million yuan, up 31% year on year.
According to the bank, the company proactively invests in and operates the largest AI-specific infrastructure SenseCore device in China to help it gain a first-mover advantage in computing power in the transformation and upgrading of AI 2.0, and has achieved remarkable results in basic model development and generative AI applications. The revenue and share of the generative AI business is expected to continue to increase, and the scale effect will help the company gradually narrow its losses.
The bank expects revenue of 4.496 billion yuan and 5.889 billion yuan respectively in 2024-2025, with year-on-year growth rates of 32% and 31%, of which generative AI revenue is 2,248 billion yuan and 3,597 billion yuan respectively, traditional AI revenue is 1,753 billion yuan and 1,666 billion yuan respectively, and smart car business revenue is 495 million yuan and 627 million yuan respectively. Maintain a “buy” rating and give a target price of HK$0.97, corresponding to 5 times PS in 2025.