Incident: On 12/1, Jianghuai Automobile Corporation and Huawei Terminal Co., Ltd. signed a “Smart New Energy Vehicle Cooperation Agreement”. The two sides will focus on building luxury intelligent connected electric vehicles based on Huawei's smart car solutions.
This is the first smart selection cooperation model in the form of an official announcement. The distribution of powers and responsibilities is clear: in order to ensure that the cooperative models are launched on time according to the agreed plan, the company and Huawei have detailed disclosure on model development, manufacturing, and sales services. 1) Model development: Jianghuai Automobile is generally responsible for product development of cooperative models. 2) Manufacturing: Jianghuai Automobile is responsible for building an advanced production base and using Huawei's advantages in the terminal field to achieve efficient delivery of cooperative models. 3) Sales service: Jianghuai Automobile has agreed that Huawei terminals or its designated third parties will exclusively provide sales of cooperative models worldwide, and the two sides will jointly establish a “user-centered” service system. 4) Others: JAC will also establish a regular exchange of visits with senior Huawei executives to regularly exchange market information, industry trends, technological innovation, and marketing experience. The intellectual property rights of products independently developed by JAC during this period belong to this party. We believe that 1) This announcement is the first time in the form of an official copy. The car company announced that it has begun cooperation with Huawei using the smart selection model. The announcement clarifies the cooperative relationship between the two sides while also disclosing more cooperation rules. 2) The car BU business plans to be spun off on 11/26 and has an independent shareholding attitude. According to Yu Chengdong at the intellectual press conference on 11/28, he has issued an equity offer to its Hongmeng Zhixing members, including JAC. It is not ruled out that the company will launch deeper smart car business cooperation with Huawei in the form of equity investment.
A cooperative relationship was established early on to actively seize opportunities for new energy transformation: while focusing on passenger business, the company actively expanded cooperation with Huawei abroad, and the two sides laid a good foundation for cooperation. 1) Autonomy: The company's commercial vehicle business continued to grow year on year. In the first 10 months of 2023, commercial vehicle sales were +13.3% year-on-year to 194,000 units. Among them, heavy goods vehicles and buses grew rapidly. 2) In terms of cooperation: The company signed a comprehensive cooperation framework agreement and MDC platform cooperation agreement with Huawei since 2019/12. Its Sihao QX is equipped with a Huawei vehicle engine system. In 2023/7, the Huawei 77GHz millimeter wave radar debuted on the Sihao Ai Run. It is expected that the Ruifeng RF8, which will be launched in 2023/12, will also be the first MPV model equipped with a Huawei smart cockpit. 3) As one of the car companies that established a cooperative relationship with Huawei in the early days, the company has sufficient experience in cooperating with Huawei and made relevant preparations. 2023/10 The company's transfer of factory assets through public listing may also be related to new cooperation preparations. The company has a state-owned capital background and has regional resource advantages. It is expected that it will more fully enjoy the capital/resource preferences of local governments and achieve high-end electrification brand transformation through Huawei's intelligent empowerment.
Attention should be paid to the new developments in the company's cooperation with Huawei: we believe that in the short term, we should focus on the market performance of the company's commercial vehicles+export business and the Huawei-themed market catalyzed by the launch of selected new models; in the medium to long term, we should focus on the progress of new models cooperating with Huawei. We maintain the company's 2023-2025E net profit forecast of 22/3.7/560 million yuan. We recommend that you pay attention.
Risk warning: Competition in the automobile industry is intensifying, the recovery situation in the commercial vehicle industry falls short of expectations, progress of cooperation falls short of expectations, and export sales volume falls short of expectations.