The company is the only listed company specializing in automotive cable business in China. with the rapid increase in the permeability of new energy vehicles, there is a new demand for a large number of automotive high-voltage cable products; with the deepening of automobile intelligence, the demand for automotive common cables and data cables has also increased significantly. Due to the continuous increase in cable usage and use value of each car, even if the total amount of car sales does not increase, the market demand for automobile cable products will still increase significantly, and the company, as the domestic capital leader in the subdivision industry, the performance will also show a good momentum of growth, giving a "highly recommended" investment rating for the first time.

Domestic cable leading enterprises, products meet multinational standards. Since its inception, the company has focused on the automotive cable industry. The company's cable product specifications include a cross-sectional area of 0.13mm to 160mm, and a temperature resistance grade of-65 ℃ to 250℃, which can meet the requirements of international standards, German standards, Japanese standards, American standards, Chinese standards and other standards. In recent years, the company has actively arranged special cables for new energy vehicles. Brand effect will help the company to gradually get more customer recognition and enhance the market share of products.

Product upgrading + domestic substitution, the scale of the industry is growing steadily. The automobile industry is changing to the direction of electrification, intelligence and lightweight, which will effectively promote the structural upgrading of automobile cable demand. On the one hand, high-voltage cables are high value-added and belong to the pure incremental market, which will grow rapidly with the development of new energy vehicles, while the gross profit margin of the company's high-voltage cables (about 20%, 30%) is significantly higher than that of ordinary cables (about 10-15%). The conditions for the volume of high-voltage cables to rise are met. On the other hand, under the trend of intelligence and lightweight, the demand for data cable is expected to increase gradually, and aluminum cable instead of copper cable is expected to become the development direction in the future. In addition, with the further transfer of the automobile industry chain to China in the future, the development prospect of the domestic automobile cable industry is good.

The downstream customer resources are rich, and the new energy business is accelerated. The company is rich in customer resources and maintains long-term and stable cooperation with mainstream wire harness manufacturers, including Ambofo, Household, Lear and Guhe for more than 10 years. In terms of terminal applications, the company's high-voltage line has been certified by Volkswagen, Mercedes-Benz, Tesla, Inc., BYD, Geely and other vehicle manufacturers. In 2022, the company supplied products such as high-voltage cables and ordinary cables to BYD and Geely through downstream harness dealers. As of September 23, the company's sales of high-voltage cables accounted for about 10%. In the future, the company will further develop the market for high-voltage cables.

For the first time, it covers giving a "highly recommended" investment rating. The company speeds up the development of new products, and timely promotion to customers, and strive to data cable, aluminum cable, new energy high-voltage cable and other special cable business in the forefront of the industry. The company is expected to return to its parent net profit of 1.9,2.70 and 360 million yuan in 23-25, giving it a "highly recommended" investment rating.

Risk hints: the risk of fluctuation in the automobile industry, the risk of rising raw material prices, the high concentration of suppliers, the high concentration of customers, the digestion risk of new production capacity, and so on.