With the fading of the smartphone dividend and the advent of the VR era, Goertek (002241, SZ), which has a forward-looking layout vr/AR, has occupied a first-mover advantage.
On April 27, Goertek released the first quarter report of 2022, showing that the company achieved operating income of 20.112 billion yuan in the quarter, an increase of 43.37% year-on-year; the net profit attributable to the mother after deducting non-deductions was 878 million yuan, an increase of 46.06% year-on-year. At the same time, Goertek also took the lead in releasing the 2022 semi-annual performance forecast, the company's pre-profit of 2.077 billion yuan to 2.423 billion yuan, an increase of 20% to 40% year-on-year, after deduction of non-attributable net profit of 1.903 billion yuan - 2.185 billion yuan, an increase of 35% - 55%.
For the reasons for the substantial growth in performance, Goertek explained that the main reason is that the company's VR virtual reality, intelligent game consoles and other products sales revenue growth, profitability increased.
It is worth noting that in recent years, the global smartphone market has shown a slowdown in growth, while the emerging smart hardware product market represented by VR virtual reality and TWS smart wireless headsets has risen rapidly, and Goertek shares with forward-looking layout are ushering in a harvest period.
CICC believes in the latest research report that consumer electronics has entered the post-smart machine era, and AIoT, wearable and ARVR products are expected to take over the baton to promote the rapid growth of the consumer electronics market. With the development strategy of "finished products + parts" and "large customers", Goertek accelerates the layout of pan-home entertainment terminal products, and is expected to seize the opportunity of the next decade of consumer electronics development and grow into the world's leading electronics manufacturing platform.
Smart hardware has become a core business
Goertek, which started out on acoustics, has obviously taken the lead in the process of running towards the metacosm.
In the first quarter of this year, Goertek achieved operating income of 20.112 billion yuan, an increase of 43.37% over the first quarter of 2021. Among them, the intelligent hardware represented by the VR all-in-one machine has played an important role. Specifically, in the main business of Goertek, precision components achieved revenue of 3.153 billion yuan; intelligent acoustic machine achieved revenue of 6.469 billion yuan, an increase of 6.10% year-on-year; intelligent hardware achieved revenue of 10.144 billion yuan, an increase of 125.05% year-on-year.
In the view of a brokerage analyst, the main driver of Goertek's revenue growth lies in VR, considering Goertek's industry position, the company's hardware product revenue growth, indicating that this market is also growing at a high speed.
It is worth noting that in the past 2021, the shipment of smartphones was 1.35 billion units, which has basically returned to pre-epidemic levels, but its growth has slowed down significantly. This year, the VR/AR headset market ushered in a re-outbreak after 2016.
Compared with 5 years ago, VR/AR has been greatly improved in terms of hardware equipment, technical level, content ecology, and creative environment, and the industry ecology is healthier and the industrial foundation is more solid.
According to the statistics of IDC, a well-known consulting organization, in 2021, the global shipment of VR virtual reality products will be about 9.36 million units, an increase of about 68.6% year-on-year, and the global shipment of AR augmented reality products will be about 330,000 units, an increase of about 13.8% year-on-year.
The global VR virtual reality industry will continue its rapid development trend in 2021, and more well-known manufacturers in the consumer electronics and Internet industries will actively invest in the VR virtual reality industry, which will promote the continuous progress and development of related hardware technology and software content.
Correspondingly, Goertek's intelligent hardware revenue in 2021 reached 32.809 billion yuan, an increase of 85.87% year-on-year, and the growth rate exceeded that of precision components and intelligent acoustic machines, accounting for 41.94% of the total revenue, becoming the first core business of Goertek.
From the data alone, the proportion of intelligent hardware in Goertek Acoustics' business has further increased. In the first quarter of this year, the business accounted for more than 50% of the total revenue.
Based on the substantial growth in sales revenue of VR virtual reality, smart game consoles and other products, Goertek expects that in the first half of this year, it can achieve a net profit attributable to the mother of 2.077 billion yuan – 2.423 billion yuan, an increase of 20%-40% year-on-year; the net profit attributable to the mother after deducting non-deductions is 1.903 billion yuan – 2.185 billion yuan, an increase of 35% - 55% year-on-year.
According to IDC data, global VR shipments are expected to reach 15.73 million units in 2022, an increase of about 44% year-on-year, and it is expected that the release of new products such as Quest 2 upgrade and Sony PSVR 2 in 2022 will catalyze further expansion of industry demand.
Minsheng Securities mentioned in the research report that Goertek is a leading ODM company in the VR industry, deeply bound to core BRANDS of VR at home and abroad such as Meta, Sony and Pico, and the sustainable development of the VR industry will drive the company's performance growth.
R&D plus to win the first-mover advantage
In the new smart hardware market, the emerging product market represented by VR virtual reality and TWS smart wireless headsets has risen rapidly. How to stand out from the crowd, forward-looking strategy, continuous R&D investment is crucial.
As early as 2012, Goertek began to lay out VR, and in 2016, it entered the AR field. In 2021, VR ushered in an outbreak, and in the past 10 years, Goertek has completed the research and development and mass production of a number of star VR/AR products together with well-known strategic partners such as Meta, Sony, Lenovo, etc. in the industry, as well as Qualcomm.
Cooperation with many well-known enterprises has also enabled Goertek to achieve a large number of technical solutions and the accumulation of manufacturing experience. Goertek said that thanks to the company's active layout of smart hardware business areas other than smart phones in recent years, the growth of the above emerging smart hardware product market has promoted the healthy growth of the company's precision components business, intelligent acoustic machine business and intelligent hardware business related to it.
With the continuous improvement of VR/AR machine shipments, Goertek combines precision components such as acoustics/optics/sensors/structural parts with long-term accumulation and layout, and VR/AR supporting components are also further expanded under the drive of the whole machine.
Of course, a series of achievements and strategies are achieved on the basis of research and development. According to the financial report, Goertek invested 4.301 billion yuan in research and development in 2021, an increase of more than 20% year-on-year, and the cumulative investment in the past 5 years has reached 13.4 billion yuan.
Entering 2022, this leading enterprise continues to increase in research and development, in the first quarter of this year, the company's research and development expenses reached 1.114 billion yuan, an increase of 58.07% year-on-year, mainly used in virtual reality and acoustics, optics and other fields of research and development investment.
Up to now, through continuous research and development, Goertek has applied for 25,000 patents, including 13,000 invention patents, and has won the first place in the comprehensive ranking of R&D strength of China's electronic components enterprises for 6 consecutive years.
According to the list of "2022 World's Most Valuable 100 Technology Brands" released by Brand Finance, a world-renowned brand value evaluation agency, Goertek has been on the list for two consecutive years, and its ranking has risen to 76th in the world.
CICC believes that relying on its strong ODM capabilities, Goertek has reached a cooperative relationship with the world's leading wearable brands, and with the release of customer products, the company's related business is expected to achieve rapid growth. In the long run, the company's core components such as motors, Bluetooth, wireless charging and optics have been deepened, and the product categories have accelerated their expansion, and it is expected to become a global electronic manufacturing leader in the AIoT era in the future.
In terms of future development strategy, Goertek said in the 2021 annual report that it actively grasps the new opportunities for industrial development in the post-mobile era and deepens the implementation of the company's "precision components + intelligent hardware machine" strategy. Promote the further development of precision components such as acoustics, optics, microelectronics, and structural parts, and smart hardware complete machine businesses such as virtual/augmented reality, smart wireless headsets, smart wearables, and smart homes.
(This article does not constitute any investment advice, and the content of information disclosure is subject to the company's announcement.) Investors operate accordingly at their own risk. ）
Text/Peng Fei