ArcSoft(SH:688088) Minsheng Securities·2024-04-30 05:30Investment Rating - The report gives a "Buy" rating for the company, with a target price of 33.33 CNY, corresponding to a PE ratio of 96/70/51 for the years 2024-2026 [2][89]. Core Insights - The company is a global leader in imaging and visual technology, leveraging a high-margin, high-R&D, and high-dividend IP licensing model. It has maintained a gross margin of approximately 90% and a research expense ratio above 30% for the past eight years, reaching over 50% in the last two years [1][28]. - The company is capitalizing on AI industry innovations, diversifying its revenue structure beyond smartphones, and is expected to benefit from a new global innovation cycle in traditional mobile and smart driving businesses [1][94]. - The AI commercial photography market is projected to reach a scale of 142-278 billion CNY in 2023, driven by the need for cost efficiency among small and medium-sized e-commerce businesses [2][77]. Summary by Sections Company Overview - The company focuses on computer vision, providing algorithm licensing and system solutions. Its primary revenue model involves deep integration of computer vision algorithms with client devices, allowing for technology and software usage fees [8][28]. AI Commercial Photography - The report highlights the rapid growth of the AI commercial photography market, with traditional commercial photography facing high costs and inefficiencies. The company’s AI solutions can reduce production costs by up to 95% [2][19][55]. - The AI commercial photography products cover various needs, including AI product images and model images, with flexible subscription models for different customer types [60][61]. Mobile Intelligence - The company maintains a leading position in smartphone imaging algorithms, with expectations for revenue growth driven by the upcoming AI smartphone innovation cycle. The Turbo Fusion series of algorithm products is central to this growth [39][40]. - Revenue from mobile intelligence is projected to grow at rates of 14%/12%/10% from 2024 to 2026, with a stable gross margin around 92% [73]. Smart Driving - The smart driving business is progressing steadily, with the VisDrive solution seeing increased customer adoption and project depth. Revenue growth for this segment is expected to be 40%/50%/55% from 2024 to 2026 [50][68]. - The company has established partnerships with multiple automotive manufacturers, enhancing its product offerings in the smart driving sector [46][47]. Financial Projections - The company’s revenue is forecasted to reach 847 million CNY in 2024, 1.073 billion CNY in 2025, and 1.364 billion CNY in 2026, with corresponding net profits of 141 million CNY, 193 million CNY, and 266 million CNY [100].