"specialized and special new" domestic EMS leader
The company is a leader in the field of domestic engine management system (EMS). The company's main business includes automotive EMS products, hybrid EMS products, pure electric automotive electronic control systems and motorcycle EMS systems. EMS products have realized the transformation from national five to national six standards. EMS products are mainly used in class N1 commercial vehicles (accounting for about 85%) and class M1 cross passenger vehicles (accounting for about 15%).
Commercial vehicles: the market is close to the bottom space, and the policy increase brings benefits.
The domestic commercial vehicle market has experienced a continuous decline in the past three years. Market sales in 2022 have reached a minimum of 3.3005 million in the past decade, down from 3.4513 million in 2015. With the release of the epidemic policy, the macro-economy will usher in a recovery. Superimposed with the "Blue Brand New deal", the commercial vehicle energy saving and emission reduction policy and the recently issued pilot policy on public sector electrification, the commercial vehicle market is expected to pick up significantly in 2023. The company will start mass production of a number of commercial vehicle projects this year, and sales of related EMS products will rise rapidly.
Passenger cars: business breakthrough is imminent, and the second growth curve is expected to be formed.
With the rapid increase of domestic new energy vehicle market penetration in 2022, plug-in and pure electric models have become the market concern. The impact of 23-year subsidy slope is limited, and the market is expected to continue to grow rapidly. The company's business is in the process of transforming from a commercial vehicle to a passenger car market. After four consecutive years of slow growth, the sales of the motorized main product vehicle controller (VCU) have been recognized by the market. A number of hybrid and pure electric models have entered the development cycle. In 2022, the company sold a total of 19377 sets of VCU, an increase of 454.75% compared with 4261 units in the same period last year. We speculate that VCU sales in 2022 will increase by 4.5 times over the previous year, with sales of about 73400 units.
GDI to build New growth Space in the Future
The company's EMS products include intake port injection (PFI) and in-cylinder direct injection (GDI), both of which have their own advantages. GDI is more energy-saving and efficient, and customers are free to choose the two schemes. in order to achieve the strategic goal of customer transformation to passenger cars and products to new energy, the company has gradually entered the M1 sedan, SUV and MPV models market after gaining a certain market share in the M1 cross-passenger car market. It is expected that a number of GDI cars, SUV, MPV and other models will be mass produced this year.
Investment suggestion
1) Automotive EMS is the main contributor to the company's revenue and profit, of which the 20-year merchant / passenger ratio is 84:16, and we believe that with the economic recovery and policy incentives, the recovery of the commercial vehicle market will support the company's EMS products to return to steady and positive growth. 2) in the passenger car market, except M1 crossover passenger cars, the EMS product research and development of GDI scheme has achieved results, M1 cars, SUV, MPV and other models are coming into mass production, and begin to gradually enter the M2 market. 3) as the electronic control manufacturer of the whole product line layout, VCU products are expanded rapidly, MCU products are worth looking forward to, the company can support fuel vehicles, hybrid cars and pure electric models, and fully grasp the opportunities of new energy.
We are optimistic that the company in the recovery of commercial vehicle fundamentals, the company's active R & D investment to achieve a full product line layout, and bring the passenger car market expansion. We expect the company to achieve an operating income of 7.30 Universe 921,100,000,000 yuan in 2022-2024, an increase of-12.5%, 26.2%, 27.8%, and a net profit of 0.50, 18,000,000,000 yuan, an increase of-63.7%, 136.8%, 66.8%, corresponding to 2022, 2023, and 2024 P/E110.93/46.85/28.08x. Cover for the first time, giving a "buy" rating.
Risk hint
The commercial vehicle market recovery is less than expected risk; the company's new project development is less than expected risk; the company's new customer expansion is not as expected; domestic new energy vehicle sales decline risk; high customer concentration risk; chip, oxygen sensor and other core components supply lower than expected risk.