In the fast-evolving realm of high-precision navigation technology, Siwei Map, listed as 002405.SZ, has emerged as a pivotal player in China’s map-making industryHowever, the latest financial indicators suggest that despite its efforts in the burgeoning smart driving sector, the company is grappling with significant challenges that could inhibit its growth trajectory.
Recent projections for 2024 indicate that Siwei Map anticipates a continued net loss ranging between 781 million to 1.116 billion yuanAlthough this represents an improvement compared to previous periods, the specter of ongoing financial deficits casts a long shadow over its futureAdding to investors' unease is a recent announcement revealing that several high-ranking executives plan to divest a portion of their stock, further spotlighting the inherent risks the company faces.
Despite efforts to narrow its losses, Siwei Map remains embroiled in financial turmoil.
According to the recent fiscal forecast, Siwei Map is expected to report losses of between 781 to 1,116 million yuan, marking a year-over-year increase of 15.04% to 40.53%. Its revenue outlook sits at between 3.45 and 3.7 billion yuan, an anticipated growth of 10.51% to 18.52% compared to last year.
In an official statement, the firm elaborated on the reasons for its financial fluctuationsIt noted that the domestic integration of smart driving technology and cloud-based vehicle systems is accelerating, leading to an uptick in the adoption of automotive smart productsThe launch of the NI IN CAR integrated intelligent automotive solution reflects the company’s effort to create a product matrix that ranges from entry-level to mid-to-high-end offerings, leveraging competitive pricing strategies to capture market share.
In terms of operational strategy, Siwei Map has bolstered its localized services, witnessing rapid growth in its compliance data segment while also seeing substantial increases in its smart chip division's output
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The company is driving efficiency by optimizing supply chain management and controlling R&D expendituresThe management is optimistic that as mid-to-high-end smart driving technologies become more prevalent and business operations mature, the company will significantly reduce losses by 2025.
Nevertheless, investors' primary concern revolves around when Siwei Map will finally return to profitability. Historical financial reports reveal a persistent decline in gross margin, with the overall figure standing at 34.69% for the first three quarters of 2024—a decrease of 7.71 percentage points year-on-yearThe competitive landscape in high-precision mapping, now crowded with heavyweights like Baidu and AutoNavi, has severely constrained the profit margins of traditional mapping firms, exacerbated by aggressive pricing wars.
Additionally, while the company's indirect holdings in Shenzhen Youjia Innovation Technology, which recently went public in Hong Kong, brought in some accounting gains, the fluctuating nature of investment returns could amplify performance uncertaintiesCombined with the unproven effectiveness of market expansion efforts and disappointing growth rates in compliance data services, as well as lingering questions about sustaining high growth in smart chip output, Siwei Map's ability to generate cash flow seems increasingly precarious.
A collective divestment by top executives raises questions about internal confidence versus profit-taking.
On January 23, 2025, Siwei Map announced that several executives, including Deputy General Manager Bi Lei, Financial Director Jiang Xiaoming, Chairman of the Supervisory Board Zhang Xuna, Deputy General Manager Liang Yongjie, and Board Secretary Meng Qingxin, plan to sell a combined total of no more than 1.7714 million shares, which is about 0.0758% of the total stock, excluding repurchased shares.
Although the amount being divested is relatively small and these executives have committed to limiting their annual divestments to 25% of their holdings, such activities send nuanced signals regarding confidence levels within the organization
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Many of the divesting parties are core management members, with Bi Lei planning to offload 477,500 of his 1.9099 million shares, having already reached the 25% cap on his holdings; Jiang Xiaoming intends to sell 470,000 of his 1.88 million shares; Meng Qingxin is looking to divest 42,000 shares; and Liang Yongjie plans to offload 40,000 shares.
All shares being sold derive from the stock equity incentive plan, and such actions by high-level executives frequently lead to market skepticism regarding the confidence of insidersParticularly during a downturn in performance, such a move may further dampen stock prices.
According to Wind data, Siwei Map’s stock price saw an 8.31% increase in 2024, with the total market capitalization rising from 21.16198 billion yuan at the beginning of the year to 22.86432 billion yuan by year’s end, marking a net gain of 1.70234 billion yuanYet as the company’s valuation struggles to climb, executives have opted to cash out at this peak.
While the announcement reassured that these divestitures "will not lead to a change in control," the recent changes in the company's core management, including the resignation of Chairman Yue Tao in 2023, coupled with the recent stock sales, could potentially jeopardize stability in the execution of the company’s strategic initiatives.
Despite the challenges, Siwei Map does possess certain bright spots, particularly in its considerable investment in research and developmentIn the first three quarters of 2024 alone, the company spent approximately 930 million yuan on R&D, constituting 36.81% of its total revenue, which has resulted in some tangible achievements.
As early as 2023, Siwei Map declared that its high-precision mapping has already covered over 400,000 kilometers of highway and ramp across the nation, with urban roads in more than 120 cities targeted for inclusion, aspiring to expand coverage to 150 cities by 2025.
In the chip segment, the company reported a shipment of nearly ten million microcontroller units (MCUs) in the first half of 2024, representing a 13% increase, bringing total shipments to 60 million
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