A leading global segment for automotive cleaning parts, traditional and emerging businesses go hand in hand. The company has been deeply involved in the automotive micromotor circuit for many years. In the early days, it started with car cleaning parts. In recent years, the product matrix has been continuously enriched, and production capacity has continued to expand. Currently, motor products cover car door motors, cleaning motors, fan motors, etc., and have expanded vertically into the cleaning system assembly process, entering traditional joint ventures, strong autonomy and direct supply systems with leading new forces, and supporting global vehicle brands through overseas Tier 1. Currently, they have become the invisible champion in the global cleaning pump segment, with a market share of over 25%. Furthermore, based on technical homology, the company horizontally expanded products such as cooling manifolds and electronic water pumps in thermal management systems, and bound high-quality customers such as Tuopu and Sanhua to contribute to increased performance in a rapid growth channel.
The automotive micromotor market space is large, and the company focuses on the “four doors and two covers” incremental component process. Automobiles are one of the main sources of demand for micromotors. Trends in the electrification and intelligent industry bring demand for new components such as cockpits, body, and chassis. Application areas continue to expand, and market demand continues to grow, driven by middle and high-end models with a higher number of assemblies. According to our estimates, China's automotive micromotor industry space is expected to grow to 54 billion yuan in 2028, and the CAGR will reach 8.6% in 2023-28. Chinese automotive micromotor companies were established relatively late, and their revenue volume is small. Compared with overseas giants, there is still a lot of room for growth. The company currently focuses on the “four doors and two covers” and cleaning motor segments. The electrification penetration rate is low, there is a lot of room for growth, and participants are limited. The company binds downstream core customers, achieves better cost control capabilities than the industry through platform-based production, and forwardly lays out harmonic magnetic field motor technology, and its share is expected to continue to increase.
Advanced intelligent driving has spawned the demand for ADAS intelligent cleaning, and the company is leading the industrialization process. At this stage, high-level autonomous driving has gradually become the leading competitive gripper for car companies. L2+ level intelligent driving has accelerated penetration, driving the continuous increase in the number of ADAS sensing hardware such as cameras and lidars installed in bicycles.
Since ADAS sensing hardware is mostly deployed on the outside of the vehicle body, it is easily covered by dirt and poses a safety hazard, leading to increased demand for ADAS intelligent cleaning systems. At present, most ADAS hardware leaders have launched corresponding products, and the industrialization process continues to accelerate. Based on the business advantages of traditional cleaning systems, the company has forwardly developed an autonomous sensing cleaning system. It has now entered the road test stage and will gradually enter a fixed stage. The industrialization implementation progress is at the leading level in the industry, and is expected to become another growth engine for the company in the medium to long term.
Profit forecast and valuation: Benefiting from improved demand in the downstream car market, continuous expansion of the company's micromotor production capacity, continuous expansion of product application fields, new thermal management business, gradual mass production of ADAS intelligent cleaning products, reduction in raw material costs, and increase in the self-control rate of core components, the company's net profit to the mother in 2023-25 is expected to reach 200 million/280 million/360 million yuan, respectively, +40%/+36%/+31%. The CAGR in 2023-25 reached 33%, corresponding to 30.3/22.3/17.0 times PE, respectively. Considering the company's obvious competitive advantage, the high-growth track of card slots was covered for the first time and given a “buy” rating.
Risk warning: risk of raw material price fluctuations; new business development and production capacity falling short of expectations; industry demand falling short of expectations; industry size estimation errors.