Local vehicle design leader, take advantage of the new energy trend to usher in new growth: the company is the domestic vehicle design industry leader, the main business is vehicle research and development, auto parts manufacturing. Riding on the new energy Dongfeng has grown rapidly since 2017, and the proportion of revenue from the new energy vehicle design business has increased from 16.18% in 2016 to 72.87% in 2022. CAGR reached 74% between 2016 and 2021.

Vehicle design business: downstream models compete for catalytic vehicle design demand, project charging system to ensure income stability: traditional & new forces open the second half of the competition, actively expand the product matrix to seek technology upgrading, automotive design market demand is high. The company adopts the project node charging system, and the revenue recognition has nothing to do with vehicle sales, effectively isolating the risk of demand fluctuation in the downstream market.

Parts manufacturing business: high technical barriers to core components, 23 years of formal performance: the company has expanded its parts manufacturing business since 16 years, and has DHT, electromagnetic clutch modules, reducers, four-in-one powertrain, V6 engines and other automotive core parts products. The company is one of the few domestic enterprises that can sell V6 engines independently. DHT products supply SAIC GM Wuling models, which will be officially released in 2023, and the revenue of spare parts manufacturing business is expected to achieve a major breakthrough.

Forward-looking business layout: the company is one of the few vehicle research and development enterprises that have mastered a series of technologies of new energy intelligent platform. Under the background of AI model application, the company has significant advantages in data elements, enabling vehicle design to reduce cost and increase efficiency; the company cooperates with Ningde and gecko to achieve complementary advantages in the field of skateboard chassis. At the same time, actively layout technology out to sea, the company as a technical service provider identity is more friendly, is expected to further expand the foreign blue ocean market.

Investment suggestion: the company is expected to achieve a total revenue of 1.975 billion yuan and a net profit of 2.12 million yuan in 2025. Corresponding to PE 43.14x/34.42x/27.54x, considering the company's strong performance flexibility and technical strength, it will be covered for the first time and will be given an "overweight" rating.

Risk hints: the risk of brain drain; the risk of technology leakage; the progress of technology development is not as expected; adverse changes in the policies of the automobile industry