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The revenue of half of the year of Navinfo was RMB 834 million, of which, the chip business contributed nearly 20%
2017/9/7

 Upon the proposal of strategic vision of achieving "intelligent driving automobile brain", Navinfo released the 2017 first half year report, in which operating income was RMB 833,821,200, with year-on-year growth of 16.80%; the net margin of belonging to shareholders of listed companies was RMB 121,336,800, with year-on-year growth of 54.85%; the net margin after deducting non-recurring profit and loss was RMB 114,155,000, with year-on-year growth of 61.56%; total assets reached RMB 11,034,541,400, with an increase of 167.68% compared with the same period of last year.

This semiyearly report was first disclosed by Navinfo after its acquisition of AutoChips and completion of automobile electronic chip resources integration, which conforms to the earning expectation made by the company. Furthermore, the operation of "chip + algorithm + software + map" business strategy layout of Navinfo was fully realized, the main business structure was optimized, and defused the impact of the decline in electronic map products on the performance of the company, so that the overall income remained stable and sustained growth. Meanwhile, the "two wheel drive" development strategy of business innovation and investment merge was directly reflected on the business level, rendering Navinfo to have the core competitiveness for the future.

Since the release of 2016 annual report, Navinfo has adjusted main business structure, and published specific performance data based on business incomes of navigation, telematics, advanced aided driving and automatic driving, enterprise business services and industry applications, etc. At present, chip business has appeared in the financial report as expected following AutoChips merge, which means Navinfo has extended industry chain to key automobile chip link, valuing a lot for Navinfo, who wishes to take a place in the field of automatic driving.

Then, how did AutoChips perform in the first half of 2017?

According to earnings data, the chip business achieved the operating income of RMB 161 million during the reporting period, accounting for 19.34% of the total operating income, which became the third largest business only after the navigation and telematics business. As for the specific performance situation of AutoChips, which is the wholly-owned subsidiary of Navinfo, it achieved an operating income of RMB 227 million in the first half of the year with the operating margin of RMB 76,189,800 and net margin of RMB 69,204,600.

In the new earnings, Navinfo indicated that after AutoChips completed the assets transfer, the two sides gave full play to the complementary advantages in the customer base and sales channels so that AutoChips" vehicle-mounted information system chips gradually entered into the front loading market from the original after loading market, and has established strategic partnership with a number of front loading automobile manufacturers, including Toyota, Geely, Chery and other well-known domestic and foreign automobile plants. Its current market penetration rate in the front loading market has reached to 33%. AutoChips has occupied more than 50% of the market share in the domestic after loading market for many years. The navigation electronic map, the telematics products VUI and WeLink, etc. of Navinfo also quickly entered into the after loading market through AutoChips" sales channels.

AutoChips now has five chip product lines, designing vehicle-mounted information systems, telematics, aided driving, car body controlled microcontrollers and power devices. Therefore, AutoChips is also actively deploying the directions of other automobile electronic chips and is expected to launch TPMS tire pressure monitoring chips, AMP vehicle-mounted power electronic chips, MCU (BCM) car body controlled chips and other new products in one year or two. In the CES Asia 2017 exhibition of this year, AutoChips displayed the first car body controlled MCU chip in the country by its independent R & D, which can control the window"s going down, wiper adjustment and taillight switch, on the basis of which, it will also launch the overall solution of the car body controlled module (BCM). It will make AutoChips become the only one automobile electronic chip design enterprise that has a technology gap of more than five years ahead of other enterprises.

The chip business of AutoChips represents the future core competitiveness of Navinfo. Then what is the business situation of navigation that once supported half of Navinfo"s market?

During the reporting period, the navigation business of Navinfo achieved an operating income of RMB 394 million, a slight year-on-year decrease of 3.14%, accounting for 47.22% of the overall revenue. The main reason for the decline in the income of the navigation business was the influence that the mature development of the domestic mobile Internet and the stagnant growth of automobile sales had brought, which resulted in the increased pressure of the downward prices of current domestic navigation electronic map products and certain threats to the front loading vehicle-mounted navigation electronic map business.

Facing the increasingly competitive market environment, Navinfo, on the one hand, actively improves the product quality and differentiation, focuses on the advanced map data attributes and R & D of the application products, explores the commercial APP of the ADAS map besides of navigation and expands APP scenarios and sales channels for advanced map attributes; on the other hand, it continues to increase the market and customer development efforts to ensure to continue to lead the front loading vehicle-mounted navigation electronic map market, as well as maintain good strategic cooperative relationship with important Internet customers and industry customers.

During the reporting period, all versions of models of Mercedes-Benz were fully equipped with Navinfo"s navigation map data. In the same period, Navinfo also provided good services for BMW, Toyota, Ford, Volkswagen and other international automobile manufacturers, as well as the Great Wall Motor, SGMW, FAW Jiefang Qingdao Auto and other domestic automobile plants. At the same time, it actively promoted to establish cooperative relationship with Tesla, NEXTEV, Aicev, and other next-generation automobile technology enterprises, and expanded the products" application areas facing the after loading market.

The telematics business occupies a vital position in the Navinfo"s current business system, mainly including passenger auto networking, commercial auto networking and dynamic traffic information products and services. During the reporting period, the telematics business achieved an operating income of RMB 210 million, a slight year-on-year decrease of 5.14%, accounting for 25.24% of the overall revenue.

Although the operating income was slightly reduced, Navinfo gained a lot in the business promotion. In the passenger auto networking, Navinfo comprehensively implemented the integration strategy of upstream and downstream industry chain and hardware and software. In the reporting period, mass production successively started in BAIC Motor, Dongfeng, Foton, FAW, SAIC and other projects; FlyAudio"s ultimate auto machine products that carried the chip-level solution was duly issued; Great Wall Motor"s WEY, Nissan and other telematics service officially started the production. For the users" pain point, Navinfo reconstructed and upgraded the intelligent network connection scheme, and accelerated the promotion of the productization process of the results of TSP project.

In the commercial auto networking, Navinfo further expanded the front loading channels of the commercial automobile plants to enhance the market share of the APP areas of the commercial auto networking, and faced the automobile after loading service market to explore the new telematics business model based on big data. During the reporting period, Navinfo became the designated supplier of FAW Jiefang Qingdao Auto, and provided the package service of the terminal equipment of intelligent telematics, Internet APP and technical services, telematics data platform and online services; established cooperative relationship with China Continent Property and Casualty Insurance Company and other insurance companies for the in-depth digging of big data of telematics, and exploration of the profit model of the telematics business combined with insurance.

In the respect of dynamic traffic information services, Navinfo signed a real-time traffic information purchasing contract with Changan Ford to support the implementation of the real-time traffic information development plan in the Chinese market based on vehicle-mounted communication unit in Ford"s global SYNC navigation. The project will cover Ford"s imported models in the Chinese market, as well as vehicles produced by Ford"s joint venture in China. This is undoubtedly Ford"s full recognition and trust to Navinfo"s many years of deep plowing in the field of dynamic traffic information. In addition to getting orders, Navinfo also successfully passed the Automotive SPICE organization maturity ML2 certification, which will help the company"s traffic information service continue to occupy more market share in the vehicle-mounted front loading area.

If the telematics business boosted Navinfo to achieve its previous strategic transformation, the automatic driving is another strategic transformation in the future. During the reporting period, the advanced aided driving and automatic driving business realized an operating income of RMB 10,230,300 with a year-on-year growth of 18.19%, accounting for 1.23% of the total operating income.

Automatic driving business still belongs to Navinfo"s new business, which needs the increase the intensity of industrial layout and scientific research investment. Although compared with navigation, telematics and chip business, it still accounts for a small proportion, it represents a forward-looking business of the future. At present, on the one hand, Navinfo is continuing to promote the business progress of ADAS map, high precision map and navigation engine, ADAS chip and other automatic driving related products; On the other hand, increase R & D and input intensity in terms of data production of ADAS map, HAD map intelligent acquisition with the high precision and automatic production, continue to strengthen R & D and verification in the bottom core technology, and promote various technical indicators based on requirements of car navigation"s specification level.

During the reporting period, core capability with automatic driving of "map with a high precision + chip + algorithm + system platform" of Navinfo continuously promotes, successful launch ADAS application product "Ansing API" V1.0 and support C-end to use, and mass production of the first domestic chip independently researched and developed and supported to ADAS starts to pay off. In addition, fusion combining intelligent navigation engine with ADAS data with the high precision realizes vehicle-mounted operation of road"s key data, thus, making automobile plants conduct effective controls to vehicles based on operation results. At present, some automobile plants have conducted or will conduct joint debugging.

Although enterprise service and industry application business are not the core businesses of Navinfo, but the foundation for building big data ecology, as well as a carrier of innovation application propulsion, including location big data and travel information. It is worth mentioning that MineData -- innovation application product of location big data of Navinfo was released in June, as one-stop location big data service platform of "data + visualization + analysis and evaluation", MineData will provide a deep and customized all-round solution for each industry, and has been given "Innovative Product Award" of ITS Asia 2017. Meanwhile, Navinfo has signed and entered into a strategic cooperation agreement with China Academy of Urban Planning & Design, Traffic Research Branch, and SEISYS to carry out long-term in-depth cooperation based on data of application platform of company"s geographical information, map and traffic information.

We can see after analysis, the business layout of Navinfo has showed diversified development, getting rid of immoderate reliance on a single business. Resources in different business systems complement each other to form an organic virtuous cycle, and eventually develop into an advanced end-to-end automatic driving solution supplier with a high quality in China. With the cooptation of AutoChips, Navinfo, fully combining the map with a high precision, artificial intelligence with chip, will grow to be the only listed company with "high precision map + car navigation"s specification level intelligent chip" in domestic A-share market to create its own future.

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