The strategy of "Intelligent Automobile Brain" has achieved initial success, and Navinfo has realized the operating income of RMB 2.156 billion

Posted on Thursday 31 May 2018, by Harald Hagenaars

Recently, Navinfo has released 2017 annual performance report, and focusing on the strategic vision of "Intelligent Automobile Brain", the company has realized the operating income of RMB 2.156 billion with a year-on-year growth of 36.03%; and net margin of RMB 265 million, with a year-on-year growth of 69.38%. The total assets rose by nearly RMB 10 billion to RMB 9.799 billion with an increase of 137.71%.

It"s well known that after the acquisition of AutoChips, the main business structure of Navinfo has been obviously changed, and five core businesses of navigation, connected car, chips, advanced aided driving and autonomous driving, enterprise services and industry applications have been formed. After the complete operation in 2017, chips, advanced aided driving and autonomous driving play the role of business growth. The operating incomes are RMB 517 million and RMB 43 million with the increase of 100% and 89.66% respectively compared with last year. The chip business enables "software and hardware integration" of Navinfo to take a solid step, so that Navinfo has been equipped with the complete independent R & D capacity and expected to make breakthroughs in the core strength of international monopoly in this field, which is particularly important in the context of the current Sino-US trade war. At the same time, the profitability of the chip business has been repeatedly verified in the fierce market competition. In 2017, Navinfo completed 800,000km ADAS map data collection, covering 50% of highway mileage and some key urban roads in China. In the meantime, it has signed strategic cooperation agreements with Visteon, BOSCH, BMW, BDStar Navigation, HoloMatic and other well-known and innovative enterprises in the industry to jointly develop solutions to autonomous driving with in-depth layout of intelligent driving.

In addition to these two major emerging businesses, there are other relatively traditional three major businesses: navigation, connected car, enterprise services and industry applications performed well in 2017. The navigation business has developed stably and achieved the operating income of RMB 941 million with a year-on-year growth of 15.43%. The market share has continued to take the lead, of which the operating income brought by map compilation has obviously been beyond expectations after many years" market cultivation. Based on the platform of SmartCloud, connected car business has been gradually integrated into a complete service and ecology and established a new type of partnership of co-existence and common prosperity with automobile enterprises and third party cooperative partners. This profitability model has brought about significant changes in the development of connected car business: The proportion of service income to connected car income increased from 86.21% in 2016 to 99.28% in 2017, indicating that nearly all the operating incomes of connected car business of RMB 475 million comes from services provided for customers rather than hardware, which is a qualitative change. The business of enterprise services and industry applications has actively expanded the market in public safety, financial insurance, traffic management, public travel and other industries and realized the operating income of RMB 178 million by focusing on location big data services.

Whether it"s the rapid development of emerging businesses or stable growth in traditional businesses, they have promoted the operating income structure optimization of Navinfo. According to 2017 annual performance report, proportions of incomes of navigation, connected car, chips, advanced aided driving and autonomous driving as well as enterprise services and industry applications to the operating incomes are 43.64%, 22.01%, 23.99%, 1.98% and 8.22% respectively, which has changed the pattern that the navigation business monopolized half of the operating incomes and provided strong support for the future development of Navinfo. This also benefits from the forward-looking strategic judgment of Navinfo.

Navinfo is committed to becoming the leading high quality provider of end-to-end autonomous driving solutions in China, which is inseparable from sustained support for high proportion of R & D investment. In 2017, more than half of employees in Navinfo were R & D personnel with the proportion reaching up to 56.51%; R & D expenses were RMB 913 million, accounting for 42.36% of operating income. Navinfo has been constantly building barriers to competition driven by future technical reserves and innovation, and business layout scarcity has been formed, thus ensuring the prominent position of Navinfo in the field of autonomous driving.

Based on high-accuracy maps, high-accuracy positioning and vehicle-mounted intelligent chips and other core products and services, Navinfo has built the industry ecology by uniting long-term stable quality customers and cooperative partners with open attitudes, covering two major leading-edge fields of automobiles and Internet. In addition, focusing on intelligent driving and the location big data platform, Navinfo has set up the business incubation system and chosen autonomous driving-related visual perception, artificial intelligence (deep learning), big data analysis and other emerging businesses with competitive advantages and commercial potential for resource support and assisted in the participation in market competition to lay a foundation for maintaining competitive advantages and profitability in the long term so as to avoid the situation that "he who gives no thought to the future is sure to be beset by worries at hand".

In the past one year, Navinfo has started to actively expand the international business and set up subsidiaries in Silicon Valley and Singapore. On the one hand, it has facilitated in-depth tracking of cutting-edge technologies in autonomous driving and other fields, and on the other hand, it has established extensive industry links for the company to expand the business in this field. Navinfo has continued to maintain the "transnational friendship" with HERE and set up the joint venture in China, providing customers using HERE global location-based service platform with solutions including China map data and dynamic information. To further enhance the competitiveness of vehicle-mounted intelligent chips in the international market, Navinfo has been actively strengthening contact with its peers and seeking for in-depth cooperation and M&A opportunities through branches in Europe and the United States. The global business layout has also promoted exchanges and cooperation between Navinfo and the professional talents in the cutting-edge science and technology fields in the world.

While releasing 2017 annual performance report, Navinfo has also made the performance in the first quarter of 2018 public: operating income of RMB 453 million, with a year-on-year growth of 23.35%; net margin of RMB 73.32 million with a year-on-year growth of 46.27%. According to estimates, in the first half of 2018, changes in the net margin of Navinfo range from 10% to 40%, and the corresponding net margin changes from RMB 133 million to RMB 194 million. If considering according to the upper limit and based on the net margin throughout 2017, Navinfo is expected to complete 73.21% of the net margin throughout 2017 in the first half of the year. This shows that the performance of Navinfo will be significantly improved in 2018.

With the official release of Technology Roadmap for Energy Saving & New Energy Vehicles, the technology route of intelligent automobile is able to be made clear, of which high-accuracy maps, high-accuracy positioning, etc. are the basic supporting technologies for the technological architecture of intelligent automobiles. The rapid development of these technologies will be an important prerequisite for the accelerated improvement of intelligent automotive technology.

Navinfo had a profound understanding and in-depth technological accumulation long ago and proposed the strategic vision of "Intelligent Automobile Brain", so that it has built certain technical barriers and first-mover advantages for itself, which has become a force that cannot be ignored in the field of intelligent automobile.