Zhitong Financial APP learned that according to a research report released by China Bank International, according to the first Yihe Holdings (00838) "buy" rating, revenue from the auto parts business in the 2022-24 fiscal year is expected to grow by 50%, 50%, 40%, 168%, 80%, 46%, and the target price is 3 Hong Kong dollars. The turning point in the auto parts business has arrived, especially the business increment of Tesla, Inc. and Great Wall Motor (02333) will significantly increase their income and profit margins in the next few years.

According to the report, the company's business mainly includes office automation equipment (manufacturing and assembly of moulds and parts) and automotive parts (mainly stamping parts, including seat frames, body and chassis structures, etc.). Early on, relying on the mold experience accumulated in the office automation equipment business, the Automotive Division was established in 2008, and after the acquisition of Chongqing Digital Model in 2011, it increased the investment in plant and equipment. After trying different moulds and parts, it began to focus on the stamping parts of the seat frame, entered the supply chain of the major international first-class suppliers of seats, and then became the first-class supplier of Tesla, Inc. and Great Wall Motor.

The bank believes that the company has benefited from the rapid growth of Tesla, Inc. 's sales. Tesla, Inc. became the front seat skeleton supplier of all models at Tesla, Inc. 's North American factory in July 2021 because Tesla, Inc. assembled front seats in North America to save costs. the bank estimates that its income from Tesla, Inc. is expected to grow from HK $25 million last year to HK $150 million this year. In addition, because the seat business competition in North America is much lower than that in China and the matching unit price is relatively low, the business gross profit margin may be as high as 50%.

At the same time, the company has been the second-tier supplier of all Tesla, Inc. 's ModelY rear seats in North America since 2020 through Foggia, and this part of the business is expected to contribute HK $140 million in revenue growth this year, spreading the risk of domestic supply chain disturbances and domestic outages. All the income related to Tesla, Inc. comes from North America, which helps investors to spread the risk of shutdown. In addition, Great Wall Motor is expected to become another important growth engine, focusing on Great Wall Motor's high-end brand series (Kumgang cannon, tank series) in short supply, and is expected to become the company's largest single customer, with its revenue contribution doubling to HK $600m from a year earlier.