ArcSoft(688088) 华泰证券·2025-04-15 09:01Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 60.13 [8][9]. Core Views - The company is positioned as a leader in edge AI algorithms, with continuous high growth in performance driven by rapid revenue increases in smart driving and smartphones, alongside cost control measures [1][2]. - The company is expected to enter a high growth phase from 2025 to 2027, with significant contributions from both smart smartphones and smart automotive sectors [1][3]. Revenue and Profitability - The company forecasts a revenue of RMB 815.17 million for 2024, representing a year-over-year increase of 21.62%, and a net profit of RMB 176.69 million, up 99.67% year-over-year [7]. - For Q1 2025, the company reported revenue of RMB 209 million, a 13.77% increase year-over-year, and a net profit of RMB 49.66 million, up 45.35% year-over-year [1][2]. Segment Performance - Smart terminal revenue is projected to reach RMB 675 million in 2024, growing 16.17% year-over-year, while smart driving and other IoT revenues are expected to grow by 71.20% to RMB 127 million [2]. - The gross margins for 2024 and Q1 2025 are forecasted to be 90.43% and 89.84%, respectively, indicating strong profitability [2]. Future Growth Drivers - The company anticipates continued rapid growth in smartphone sales, supported by advanced imaging algorithms and AI-driven sales increases [3]. - The smart automotive sector is expected to see accelerated production and reduced losses, particularly through the launch of targeted models and expansion into overseas markets [3][4]. Potential New Growth Areas - The company is actively exploring new growth opportunities in AI glasses, robotics, and smart commercial photography, which are expected to become significant contributors to revenue [4]. - AI glasses are projected to become a major new terminal with substantial market potential, supported by the company's technological advantages and partnerships with notable clients [4]. Earnings Forecast and Valuation - The earnings per share (EPS) estimates for 2025 and 2026 are RMB 0.71 and RMB 0.98, respectively, with a new estimate for 2027 at RMB 1.38 [5]. - The target price reflects a price-to-earnings (PE) ratio of 85 times for 2025, indicating an increase in overall sector valuation [5].