Since Byte's acquisition of Pico, there has been news that Tencent has spent a huge amount of money to acquire VR cutting-edge Black Shark Technology. Recently, Ali also led Nreal's C+ round of financing, planning to launch virtual conference AR glasses this year. Previously, Thunderbird's innovative binocular full-color AR glasses made people feel the real experience.
VR/AR equipment has become the ticket for the major giants to enter the meta-universe era, and the foundries in it have also made a lot of money.
1
Finally turned red
On the evening of April 26, GOERTEK, the leader of the VR industry, released the first quarter report of this year: the first quarter revenue was 20.112 billion, an increase of 43.37% year-on-year; the net profit was 900 million (the previous forecast range was 870-970 million, which is quite normal), a year-on-year decrease of 6.71%, the deduction of non-net profit was 880 million, an increase of 46.06% year-on-year, and the net operating cash flow was 1.47 billion, an increase of 67.93% year-on-year.
Many people breathe a sigh of relief at the sight of these numbers, which shows that the news about the growth of VR/AR is true.
Specifically, the revenue of smart hardware was 10.14 billion yuan, an increase of 125%; The intelligent acoustic machine was 6.47 billion yuan, an increase of 6.1%; precision components were 3.15 billion yuan, down 1.42%.
Obviously, the main reason for the beautiful performance is that smart hardware has soared by 125%, accounting for almost half of the revenue.
That is to say, the revenue of hardware products in virtual reality has become the main driver of the company's revenue growth rate, which shows that VR and game console projects are better than expected.
Even if the rising cost of raw materials and exchange rate fluctuations are taken into account, the overall gross profit margin of smart hardware is not worse than in 2021, indicating that Goertek's foundry ability is getting stronger and stronger.
Overall, from a fundamental point of view, Goertek is very good, and it can even be said that it is getting better and better.
After reading a quarterly report, I would never have thought that this was a company with a stock price cut.
Before yesterday's rally, Goertek basically achieved a year-round cut, falling from 57 to 27, during which there was not a decent rebound.
There are two main reasons.
From a macro perspective, in the context of global pessimism and panic, the entire sector has accelerated its decline, With Lixun Precision falling 47%, Lens Technology falling 60%, and Goertek falling 51% also justified.
From the perspective of internal factors, from 6 fast in early 2019 to 57 blocks in early 2022, Goertek is barely a 10-fold bull stock, especially with the repeated hype of last year's meta-universe concept, the double-click effect of the emotional side and fundamentals is obvious, and the profit plate has a higher willingness to fall into the bag.
But in any case, the feelings of investors who are heavily involved in Goertek shares in the short and medium term are certainly not good.
In order to boost investor confidence, the company actively gave the next quarter forecast: the net profit range in the first half of the year is forecast to be 2.08-2.42 billion yuan, an increase of 20-40% year-on-year, and the non-net profit range is 1.90-2.18 billion yuan, an increase of 35-55% year-on-year.
The effect is obvious, and the two consecutive days of limit increases are the best illustration.
Goertek's fundamentals have given investors a reassuring pill, and it remains to be seen how long the efficacy of the drug will last.
At least for now, the high growth of Goertek in the hardware business reflects two things: externally, Goertek has become the first VR manufacturing stock from a global perspective; internally, it has become the innovation support force behind local consumer electronics brands.
In fact, as early as 2012, Goertek began to get involved in the VR field. After nearly 20 years of accumulation, it has fully mastered the core technologies such as optical design, sensor, industrial design, system integration and large-scale mass production required for VR/AR production, and can provide one-stop JDM/ODM mass production services, becoming the core supplier of global VR/AR related products, with a global market share of 70% of high-end VR headsets.
The biggest misunderstanding of the market for Goertek is to classify it as a foundry similar to Luxun Precision.
Goertek currently has 7155 patents applied for, and has authorized up to 4694. In the 2020 China Enterprise Patent Innovation Ability Ranking ranked 13th, still before BYD.
Trends in patent disclosure years, source: Tianyancha
The number of patents may not be too much of a problem, but it is not accurate to simply classify them as fruit chains. Because the manufacturing process of sophisticated acousto-optic equipment is complex, the public often underestimates the difficulty of the manufacturing process.
From the known information, the management, pattern and execution of Goertek are first-class in domestic technology companies. The company attaches great importance to R&D investment and continues to reflect it in the latest financial report.
In the first quarter, Goertek's research and development expenses were 1.114 billion yuan, an increase of 58.07% year-on-year. In the whole of last year, the company's R&D investment was 4.301 billion yuan, an increase of more than 20% year-on-year. The number of R&D personnel was 12,895, an increase of 5.90% year-on-year.
Not all manufacturing industries are foundries, and some foundries also require extremely high technical gold content, which Goertek explains very well.
For now, at least, Goertek is still the world's leading manufacturer of VR equipment, whether it's Sony VR or Meta Oculus Quest2.
As the outbreak of the VR/AR industry is approaching, Goertek, as a forerunner, is likely to be one of the main players.
Of course, these are just enjoyment, and there are still many difficulties to really achieve.
2
Industry pain points
VR technology, which is still iterating and innovating, is indeed constantly creating new changes. But in stark contrast to the attention in the capital market, the current VR is still far from the average user.
The first is the price factor.
The current audience of VR devices on the C-side is generally a technology enthusiast, such people often pursue the top use experience, but the high price matching the top device is doomed to fail to get the pleasure of ordinary users.
Taking the Valve Index equipment launched by V Society as an example, the price is about 7,000 yuan in China, and HTC VIVE Cosms has reached more than 5,000 yuan.
As for low-end products, although relatively cheap, the poor sense of experience makes most people intolerable.
This leads to another problem: technical difficulties.
Because of technical physical flaws and network delays, even in the 5G era, VR devices are still unable to display the picture and be consistent with the viewing angle of the user's line of sight.
Especially when playing first-person games such as shooting, the perspective needs to be turned quickly, and this delay is doubled and superimposed, and finally reflected in the user's brain, showing that the actual movement does not match the observed picture.
To be more specific, although the human organs are transmitting motion signals, the eye line tells the brain that the body is not moving, and this conflict between nerves and the flesh will make people feel dizzy and disgusted. It's like seasickness.
Many people will have a feeling of vertigo when playing PUBG, commonly known as halo 3D. Just looking off-screen can cause discomfort, not to mention a virtual world that feels like being in it.
Therefore, because of technical reasons, VR devices often fail to bring a good experience to users.
In addition, there is the issue of content.
From the perspective of the entire market, because of industry norms and other issues, virtual reality-related consumer-level masterpieces are extremely lacking.
Although since 2016, more and more VR experience halls have appeared on the streets, but a few years later, we can still experience the games.
To a certain extent, the current VR industry seems to be caught in a dead loop: the lack of content can lead to the lack of ability to attract users, and most of the related companies are in a state of loss; and the technical iteration of products, as well as content production, is slowed down by lack of money, resulting in lower attractiveness to users.
In the case that the B-side implementation cannot achieve scale and the C-end is relatively unattractive, the future of the VR industry does not seem to be beautiful.
Empty equipment, but no use of the scene, this is the most embarrassing real picture of the current VR industry.
In 2019, Facebook-owned virtual reality wearables company Oculus acquired Beat Games, the developer of the VR game Rhythm Lightsaber. This move shows vr equipment manufacturers' desire for content.
More notably, in March 2020, after the launch of Half-Life: Alxy, an excellent VR game, Steam's number of VR device users increased by more than one million that month. This reflects how much good work has had an impact on the VR industry.
Until now, in addition to microsoft, Apple, Nvidia, AMD and Qualcomm and other giants, domestic consumer electronics manufacturers actually lack the ability to open up from chips to content, which may also be the main reason why related manufacturers dare not rush to try VR chips, which will form a great constraint on the development of the industry in the future period of time.
The development of the industry is inseparable from the recognition of C-end users, and it is still in the virtual display industry that serves B-end users, and only by breaking through the limitations of content is the moment of real rise.
Therefore, before the industrial chain is fully mature, there are large bottlenecks in the entire industry in terms of cost, software, hardware, content and even integration.
And these, for the industry leader Goertek shares, are not negligible challenges.
3
epilogue
In 2021, there were 107 VR/AR hardware financing mergers and acquisitions, reaching 28.1 billion yuan, an increase of 210% year-on-year. The whole track is very tempting under the impetus of the meta-universe concept.
However, the current VR industry is actually still in the upstream hardware power stage, and the competitive pattern has not yet taken shape.
At present, VR products have not been improved in terms of demand, commercialization is not mature, and it is still a niche device. However, with the continuous iteration of technology, the future of VR commercialization may gradually mature.
In this process, only manufacturers with technological advantages can gain a first-mover competitive advantage.
And this year's environment is to see which growth stocks are swimming naked. Even if the thorns are everywhere, the real growth stocks will surely return triumphantly.