The smart driving business has progressed smoothly, benefiting from the intelligence of automobiles.

　　It is expected to continue to benefit from the trend of automobile intelligence and maintain the "buy" rating.

　　The company released the third quarterly report, with the revenue of 23Q1-Q3 reaching 2.318 billion yuan, up by 11.58%. The net loss attributable to the mother was 495 million yuan (a loss of 59 million yuan in the same period last year), and the net loss attributable to the non-mother was 497 million yuan (a loss of 60 million yuan in the same period last year). 23Q3′ s revenue in a single quarter was 817 million yuan, up by 15.17%, with a net loss of 200 million yuan (a loss of 24 million yuan in the same period last year). The loss is mainly due to the decline in the overall gross profit margin of the company and the increase in investment in superimposed expenses. We believe that the company is expected to continue to benefit from the trend of automobile intelligence in the future. It is estimated that the EPS in 2023-2025 will be -0.11/0.02/0.07 yuan. Segment valuation: 1) The net profit of chip business is RMB 63 million, which is 23E63.3xPE(Wind) higher than the average of the company, and 23E63.3xPE is given; 2) The revenue from other businesses was 3.479 billion yuan, which was 23E7.5xPS on average, and the target price was 12.61 yuan, maintaining the "buy" rating.

　　Actively stock up and seize the opportunity of smart cars, and the profitability fluctuates in the short term.

　　23Q1-Q3′ s gross profit margin was 42.4%, down 14.1pct year-on-year, of which 23Q3′ s gross profit margin was 36.5%, down 20.9pct year-on-year. The decline in gross profit margin was mainly due to the rapid increase in operating costs due to the company’s active promotion of smart driving and smart core business stocking. By the end of 23Q3, the company’s inventory was 909 million yuan, an increase of 30.81% compared with the beginning of the year, mainly due to the increase of raw materials and in-process products in Zhijia and Zhixin businesses; The advance payment was 160 million yuan, an increase of 80.95% compared with the beginning of the year, mainly because the company increased the stocking of some materials through advance payment. We believe that the company actively prepares goods, laying a good foundation for grasping the changes in the smart car industry, and is expected to benefit from the changes in the smart car industry in the future.

　　The smart driving business released a lightweight solution, and R&D continued to invest to promote product iteration.

　　23Q3 Company mainly released the lightweight version of NOPLite, a pilot-assisted driving system, and HDLite, a NOP lightweight and high-precision map for the whole city scene, providing a cost-effective intelligent driving scheme. At present, the company’s intelligent driving includes three product lines: L2 driving products, L2+ parking integrated products and dual-domain integrated cabin parking integrated products, all of which have reached a mature state of mass production and have been designated by mainstream OEMs. 23Q1-Q3 Company’s sales/management/R&D expense ratio is 7.5%/11.3%/52.2%, with a year-on-year change of 1.1/-2.2/4.6pct. The company maintains a high level of R&D investment and actively promotes the research and development of autonomous driving maps, autonomous driving cloud platforms and other projects. We believe that the intelligent driving business will gradually land, which is expected to provide an important driving force for revenue growth.

　　Multi-domain layout of smart cars, or take the lead in benefiting from smart driving technology.

　　The company focuses on the main car intelligent track, deeply cultivates the main business line of the car intelligent track, and develops four business segments: Zhiyun, Zhicabin, Zhijia and Zhixin, which are expected to continue to benefit from the trend of car intelligence. Considering the external environment, economic downturn and high raw material prices, the income forecast is lowered. The company continued to strengthen investment in R&D and raised its cost forecast.

　　Risk warning: the research and development results are less than expected, and the commercialization progress of intelligent driving is lower than expected.