Based on intelligent equipment, we will go downstream to discover new growth points. The company was founded in 2005. At the beginning of its establishment, it mainly targeted the commercial vehicle market and was engaged in axle and main speed reducer assembly production line business. In 2008, the company entered the passenger car sector and undertook manual transmission and engine testing production line business, thereby accumulating high-quality customer resources such as JAC, Chery, and BAIC Group. In line with the trend of the new energy vehicle era, the company began developing automotive electric drive systems in 2009, and launched the NEV powertrain assembly line business in 2015, which mainly included a hybrid transmission assembly line and an electric drive system assembly production line. The company then undertook the first international top-line battery project in 2020. In November 2021, the company officially landed on the Science and Technology Innovation Board of the Shanghai Stock Exchange. It has now become a high-end manufacturer whose business covers intelligent equipment and electric control components for new energy vehicles. The application scenarios are mainly new energy vehicles, taking into account traditional fuel vehicles; intelligent equipment: the traditional production line business is steady, and the new energy vehicle production line is rising. The company's intelligent production line business mainly consists of a white car body intelligently connecting the production line to the powertrain intelligent assembly and testing production line. The main customers of traditional cars are Geely, SAIC, Jaguar Land Rover, etc. The flexibility and high production pace of white body and powertrain production lines meet the multi-model production needs of established car companies, while customized products maintain high user stickiness; customers of new energy vehicles mainly include SAIC, Geely, Tesla, BYD, NIO, Ideal, etc. Due to the good cooperation of traditional models before, the introduction of new energy models was also very smooth. In 2019, the company provided a production line for the NIO ES8 all-aluminum body (lightweight materials accounted for more than 96%), which became a benchmark project, helping it later import customers such as Tesla and Ideal, and NEV-related businesses became the dominant business;

Electric drive system: Expanding customers+ expanding production to achieve rapid revenue growth. Juyi Technology has a complete R&D, design, production, sales and service system for new energy electric drive system products, including motors, motor controllers, and integrated electric drive systems. It can provide motors, controllers, speed reducers and their integrated forward development and product service. Judging from product parameters, the power density, maximum speed, peak efficiency, and peak power of Juyi Technology's motors, motor controllers, and electric drive systems all maintain industry-leading levels, effectively reducing vehicle quality and improving space utilization and vehicle range. As of November 2021, the production capacity of the company's motors and electronic control products was 120,000 units/year, and the “three-in-one” integrated electric drive system production capacity was 30,000 sets/year. The production capacity of electric drive systems is currently being actively expanded. It is expected that 500,000 electric drive system production capacity will be added by the end of 2023. With the expansion of production capacity for advanced products (flat wire, oil-cooled motors, silicon carbide motor controllers), the company's product performance indicators will further improve. At the same time, with the expansion of high-quality customers such as Dongfeng Nissan, FAW Volkswagen, Tianjin Volkswagen, Anhui Volkswagen, NIO Auto, and Ideal Auto, the company's electric drive system business revenue is expected to rise rapidly;

Investment advice: We expect Juyi Technology to achieve operating income of 31.60/49.52/7.209 billion yuan in 2022-2024, achieve net profit of 1,52/329/529 million yuan, corresponding EPS of 1.11/2.40/3.85 yuan/share respectively, and PE corresponding to the closing price of October 28, 2022 is 37.82/17.44/10.86 times. Driven by Juyi Technology's intelligent equipment business and electric drive business, its rich experience in production line construction and commissioning enables it to quickly expand production of electric drive products to meet the rapidly growing demand for electric drive systems, and there is strong certainty that future revenue and performance will grow rapidly. The first coverage gave an “increase in holdings” rating.

Risk warning: fluctuating raw material prices, customer introduction falling short of expectations, capacity expansion falling short of expectations