NAVINFO(002405)：FOUR MAIN BUSINESSES SHOW GROWTH;SMART AUTO BUSINESS TAKES SHAPE

2021 and 1Q22 results in line with our forecast
Navinfo announced 2021 results: Revenue rose 42.5% YoY to Rmb3.06bn, and net profit attributable to shareholders was Rmb122mn （vs.Rmb309mn attributable net loss in 2020）。 In 1Q22, revenue grew 19.8% YoY to Rmb622mn, and attributable net profit reached Rmb12mn （vs. Rmb45mn attributable net loss in 1Q21）。 The 2021 and 1Q22 results are in the middle of the firm’s preannounced range, and in line with our forecasts.
Trends to watch 2021 revenue grew sharply; returned to net profit. In 2021, the firm’s
revenue breakdown by segment is as follows. Revenue from the smart cloud business rose 53.9% YoY to Rmb20.0bn. Specifically, revenue from the navigation business grew 41% YoY to Rmb902mn. The firm continued to promote its electronic navigation maps as a digital foundation for the Mobility as a Service （MaaS） platform. Revenue from location big data services increased 54% YoY to Rmb457mn and Navinfo strengthened the construction of an IT regulation platform for the transport industry. Revenue from the smart vehicle business grew 32.8% YoY to Rmb678mn. The firm maintained its leading position in the market for heavy-duty trucks, and a Toyota model with the firm’s smart driving system was launched in 4Q21. Revenue from the smart chip business grew 15.7% YoY to Rmb352mn. The firm has started tape-out and mass production of chips, and in 2021, revenue contribution from MCU eligible for automobiles soared more than 10x YoY. In addition, revenue from smart driving business grew 10.7% YoY to Rmb6mn. The firm now offers solutions for integrated software and hardware-based autonomous driving from L0 to L2.9, including both parking and driving, and so continues to secure orders of mass production.
GM fell slightly due to tightening supply chain. The firm’s GM fell by
5.6ppt YoY to 59.9% in 2021, due to outsourcing of the smart vehicle business, rising costs of end equipment, higher operating and project costs of smart cloud business. In 1Q22, gross margin recovered 2.4ppt YoY to 63.3%. As of end-2021, the firm’s inventory surged 134% YoY to Rmb368mn and operating cashflow declined 34% YoY to Rmb91mn, as the firm increased finished products and inventory to offset the impact from tightened supply chain. In 2021, selling, G&A, and R&D expense ratios dropped 0.1ppt, 3.9ppt and 11.4ppt YoY to 5%, 12.4% and 43.6%.
The growth in selling expenses was due to greater efforts to enhance marketing and a higher number of sales employees.
Smart cloud, smart vehicle and smart driving businesses form a closed-loop with value; chip business to add new momentum.
Navinfo is forward-looking in the data compliance market, gaining orders from major OEMs such as BMW, Volkswagen, Mercedes-Benz, Volvo and Ford. Meanwhile, the firm has become a designated Tier-1 supplier for Cowin Auto’s autonomous driving system, and secured an order to produce panorama parking assistant systems for Alpine in 1Q22. In 2021, Navinfo shipped millions of MCUs able to be used in vehicles and tire pressure monitoring chips. For smart chips for vehicle cockpits, the firm continued to secure orders from the preinstallation market, with accumulated shipments over 200,000 （the firm expect the number to rise to more than 1mn by end-2022）。
Financials and valuation
We maintain our revenue forecasts for 2022 and 2023. We are upbeat on the firm’s long-term growth potential, and lift our attributable net profit forecasts by 33.9% to Rmb303mn for 2022, and by 27.3% to Rmb523mn for 2023. Maintain OUTPERFORM. Given falling industrial valuations, we lower our TP by 19% to Rmb17.00 （based on SOTP valuation methodology）， offering 36.8% upside.
Risks
Intensifying competition in autonomous driving and high-precision map sectors; companies in which Navinfo holds a stake continue to suffer losses.
【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。

   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。