Deeply involved in full-process vehicle R&D and design, R&D+Manufacturing+Overseas Multi-wheel Drive Company is the largest independent automobile R&D company in China. Since its establishment in 2007, the company has focused on the full process of vehicle and platform R&D; in 2014, based on years of R&D for OEMs, the company began to expand from design to core component R&D and manufacturing; starting in 2023, the company grasped opportunities for new energy to go overseas, created a technology+supply chain overseas model, and the growth path driven by R&D+manufacturing+going overseas is clear!

Highlight 1: The wave of electric intelligence is driving up the volume and price of the automotive design industry. AI empowerment is expected to reduce costs and increase efficiency. The electric intelligence wave will accelerate model iteration and drive up investment in bicycle model R&D, and the volume and price of automobile design have risen sharply. The company's vehicle R&D and design covers the entire industry chain, and new energy vehicles account for nearly 90% of revenue. On the customer side, the company has developed nearly 400 models for more than 80 customers, and has served independent brands such as FAW, Dongfeng, BAIC, Geely, etc., new forces such as Xiaopeng, NIO, Hezhong, etc., and joint venture brands such as Dongfeng Honda and FAW Volkswagen. AI is expected to empower the company to reduce costs and increase efficiency. The company has used tools such as midjourney to aid research and development. According to our estimates, under the power of AI, the company's per capita revenue is expected to increase from 696,800 yuan to 893,400 yuan under optimistic circumstances, and the net interest rate is expected to increase from 15.54% to 26.55%.

Highlight 2: Core component manufacturing+intelligent platform layout. The product is gradually entering the harvest period. The company is expanding to component manufacturing based on vehicle R&D and design. The DHT gearbox assembly (coupler) has been mass-produced and supplied to Shangtong 5; the V6 engine is already equipped with the BAIC BJ80, and the next generation of products is powering the hybrid commercial market. Furthermore, the company is closely following the trend of intelligence: in August 2022, the company's self-developed SOA developer platform was launched; focusing on intelligent driving solutions above L3, it has provided customers with intelligent upgrade services for ACC and AEB models; power domain control and other products will be developed and entered into mass production one after another starting in 2023. In 2023, the company became the first independent automotive design company in China to join AUTOSAR's advanced partner, and its automotive software development capabilities were recognized internationally. From vehicle design to parts manufacturing, the company is expected to enter the fast track of growth.

Highlight 3: The technology+supply chain going overseas model to build a new engine for performance growth Overseas, the NEV market is still in its infancy compared to the domestic market, but policies are frequent and transformation goals are clear. The company firmly positioned at Tier 0.5 to create a technology+supply chain overseas model: in November '22, the company invested in Yamato Industries, a Japanese listed company, to provide the company with an international business platform; in February '23, the subsidiary signed a letter of intent with a leading domestic listed OEMs to carry out in-depth cooperation on the adaptive development of a new energy vehicle model for overseas markets; in April, the company signed a cooperation framework with Malaysia's Zhengyang Group to develop in-depth cooperation in NEV brand research and development. The company aims to help more independent brands and supply chain companies go overseas, which is expected to form a new engine for performance growth.

The company is speeding up the deployment of technology+supply chain overseas model, R&D+manufacturing+overseas multi-wheel drive, and the growth path is clear. We expect the company's revenue for 2023-2025 to be 1,678, 24.53 million yuan, and 3.461 billion yuan respectively, while the net profit of the mother is 175, 354 and 597 million yuan respectively, and the corresponding EPS is 0.35, 0.71, and 1.19 yuan respectively. Considering that the company's vehicle design business is expected to benefit from AI's ability to reduce costs and increase efficiency, the technology+supply chain is expected to achieve a breakthrough in 2023. We gave the company 27 times PE in 2024, with a target price of 19.1 yuan to maintain the “buy” rating.

Risk warning: Market competition risk, technology leak risk, equity diversification risk, overseas mergers and acquisitions risk. Estimation is somewhat subjective