A leader in the field of intelligent transportation, actively started a new journey in the company's development with card position lidar. The company has multiple locations in intelligent transportation and other fields, and the dedicated short range communication business is the cornerstone of the company's current operating income. Currently, the company is increasing investment in research and development of new products such as lidar and active in new fields such as card position lidar and intelligent connectivity. Related business is expected to become a new growth point for the company in the future.

The company is a dual leader in dynamic weighing and dedicated short range communication. 1) Dynamic weighing: The company has a leading position in the field of dynamic weighing. According to the “National Highway Network Plan (2013-2030)”, the total scale of China's highway network will be about 5.8 million kilometers in the future. As the country actively promotes new infrastructure in the future, it is expected to drive the company's business growth. 2) Special short range communication: A series of products for dedicated short range communication services are mainly used in the ETC field. The company is a leader in the ETC industry, and the industry has deep accumulation. The dedicated short-range communication business is expected to gradually pick up in the future. According to the 22nd annual report, the domestic market produces about 25 million new vehicles every year. The front-loading ETC requirement has passed vehicle specification verification, and related demand is expected to be gradually released, which is beneficial to leading ETC companies. At the same time, more than 200 million market users will drive demand for ETC upgrades from two-chip to single-chip, and the overall demand side of the industry is expected to pick up.

“Double intelligence” empowers intelligent connectivity, and the lidar boom is improving. 1) Intelligent connectivity: With the spread of intelligent connected vehicles and the gradual improvement of smart city infrastructure, “double intelligence” has become the general trend. From a roadside perspective, the company actively participated in the network construction project and participated deeply in the construction of collaborative autonomous driving test sites for universities such as Chang'an University and Tongji University. Looking at the vehicle side, according to the company announcement, as of September 2023, the company's V2X business has three ongoing projects, including two commercial vehicle projects. Among them, the 5G V2X project is the first mass production project in the industry. In addition, the company has also obtained a 5G V2X target from a leading new energy vehicle company. The scale of the project is large. According to the plan, mass production and supply are expected to begin at the end of '23. 2) LiDAR: With the continuous development and popularization of technology, autonomous driving will drive onboard lidar into a period of rapid increase in demand. According to iResearch's “China Vehicle Lidar Market Insight Report”, China's automotive lidar market size is expected to grow from 4.6 billion yuan in 2021 to 5.47 billion yuan in 2025, with a compound annual growth rate of 86%. As of June '23, a number of domestic and foreign car companies have released mass-produced models equipped with lidar, and the development of automotive lidar is expected to accelerate. Currently, the company is actively deploying lidar, Flash blindness correction radar, MEMS semi-solid state lidar, and ASIC chips for automotive radar are being tested; the company is actively promoting joint testing of 128-wire automotive lidar with OEMs and autonomous driving companies, and has received a specific letter from a car company, and is simultaneously constructing an automated assembly line for automotive lidar.

Investment advice: The company is a leader in the field of dynamic weighing and ETC. Based on its advantageous position, the company actively grasps industry opportunities and welcomes new growth points. The lidar industry is booming, and the company's active layout will become one of the company's new growth points in the future. Considering that the company is in a high investment period for lidar and other products, using PS valuation, revenue for 2023-2025 is expected to be 9.46, 10.84, and 1,246 billion yuan respectively. The corresponding PS is 5X, 5X, and 4X respectively, covering the first time, giving it a “recommended” rating.

Risk warning: There is a risk of increased competition in industries such as intelligent connectivity and lidar, the risk of uncertainty about the prosperity of downstream industries, and uncertainty about the company's customer expansion in lidar and other fields.