Report summary:
Industry-leading integrated automotive smart cockpit service provider with more than ten years of experience. Huaan Xinchuang was founded in 2013. Based on automotive display design and software system development, it has continued to focus deeply on the field of automotive electronics for more than ten years, and has gradually laid out a full-chain, multi-coverage product line including smart cockpit display systems and domain control systems, full LCD instruments, head-up displays (HUD), electronic rearview mirrors (CMS), and intelligent driving assistance systems. The company uses continuously innovative technology and industry-leading integrated design solutions to provide many leading domestic car companies with comprehensive smart cockpit services with excellent performance, quality, and cost advantages.
Binding upstream core resources, full chain production helps transform the Tier 1 industry. The company and Shenzhen Tianma established a joint venture subsidiary, Jiangsu Tianhua, which held 45% of the shares; Dongfang Xinchuang, a joint venture subsidiary with BOE Precision Electronics, held 55% of the shares. Through the establishment of joint ventures with leading upstream panel companies, we can stabilize procurement channels for core components, get rid of the impact of supply chain shortages, and have stronger supply chain bargaining power and cost advantages. The company's intelligent manufacturing plant construction project in Nantong is progressing steadily. After construction is completed, the company will have full-chain production service capabilities from customized development to production and delivery, and transform into a competitive Tier 1 service provider, and the company's profit side situation will also be greatly improved.
Larger screens and screen separation drive the growth of the automotive display market and the transformation of the industrial chain. The penetration rate of new energy vehicles has increased, large on-board displays have become a trend, and the market space is broad. Under the demand for multi-screen interconnection, screen machines have become a trend, and electronic exterior rearview mirrors and head-up display systems are contributing to the incremental market. Technologies related to smart cockpits are being iterated at an accelerated pace. LTPS is clearly trending to replace a-Si, and innovative technologies such as OLED and Mini LED have become the future choice for smart cockpits. The company's LTPS in-cell project was successfully implemented, and integrated products such as MiniLED were laid out ahead of schedule, and had a competitive advantage in leading the industry.
The new national standard accelerates the penetration of CMS into the commercial vehicle market, and the company has a first-mover advantage. The new GB15084 national standard was released in December 2022 and officially implemented in July 2023. Electronic exterior rearview mirrors (CMS) are officially legally mass-produced, replacing traditional rearview mirrors as an industry trend. CMS is expected to rapidly penetrate the commercial vehicle market with its properties such as wider visibility, less impact from bad weather, and effective reduction of wind resistance and wind noise, and the market space is broad. The company's electronic rearview mirror project has been developed and is currently in the mass production optimization stage. It is ready to launch under the new national standard and has a first-mover advantage, which is expected to open up a new growth curve for the company.
Investment advice: We expect the company's revenue for 2023-2025 to be 1,146/17.68/2,864 billion yuan respectively, net profit to mother of 0.09/0.82/186 million yuan, corresponding EPS 0.12/1.03/2.33 yuan, corresponding to PE421.04/47.80/21.14X. Covered for the first time, a “gain” rating was given.
Risk warning: Competition in the industry intensifies, demand declines, and performance and valuation judgments fall short of expectations.