Huaan Xinchuang released its 2023 annual report: in 2023, the company achieved operating income of 961 million yuan (+7.95% year over year); net profit to mother -40 million yuan (-186.83% year over year); net profit after deducting non-return to mother of -48 million yuan (-226.45% year over year)
Key points of investment
The smart cockpit market space is vast, and screen separation will become the mainstream trend. The level of smart cockpit configuration is a key car purchase factor second only to safety configurations. As the market penetration rate of new energy vehicles continues to increase, the domestic automotive display market is expected to reach 150 billion yuan in 2025, with a compound annual growth rate of 20%, and China will also become the largest smart cockpit market in the world. The company has integrated software and hardware delivery capabilities for screen customization, software development, and interactive interface design, and is expected to fully benefit from the growth of the industry. Furthermore, demand for new applications such as screen separation, large screens, and CMS is currently growing in the market. The company's R&D direction accurately matches the needs. The company invested 55 million yuan in R&D during the reporting period (+43.06% year-on-year), and has now completed the development of projects such as CMS platforms, AR-HUD, LTpsin-cell assembly screens, mini LED screens, and in-vehicle 3D.
The first phase of the full-chain intelligent manufacturing plant was completed, and integrated delivery capacity was enhanced after production
On March 18, the company announced that the first full-chain production line in the first phase of the Nantong Intelligent Manufacturing Production Base plant of the fund-raising project has been commissioned and put into operation. The project has a total investment of 2 billion yuan to help the company transform into a supplier that covers everything from raw materials to Tier 2 and Tier 1. It is estimated that after all production is put into operation by the end of 2025, the project will produce 10 million LCD modules, 3 million sets of in-vehicle display systems, etc., with a total output value of 5 billion yuan. In the future, the company is expected to drastically reduce costs, increase gross profit margin, consolidate the number of visitors, and strengthen growth attributes.
There are enough orders in hand, and the number of expressions of intent for fixed-point cooperation has exploded
The company's first-mover advantage in integrating upstream and downstream and the large amount of R&D investment in the early stages has been recognized by the market. As of April 26, 2023, the company had obtained a total of 4.7 billion yuan of unmass-produced fixed-point projects. Since then, it has received a total of 4 billion yuan in new fixed-point projects, including smart cockpit development support for Changan Motor's two core models and fixed-point projects for SAIC-GM-Wuling's two display assembly products. The company's performance is expected to explode after releasing part of its production capacity in 2024.
Profit forecasting
The company's revenue for 2024-2026 is 20.53, 41.89, and 4.937 billion yuan, respectively, and EPS is 1.76, 6.66, and 9.27 yuan respectively. The current stock price corresponds to PE at 17, 4, and 3 times, respectively, maintaining a “buy” investment rating.
Risk warning
The downstream automotive industry's prosperity declined; continuous R&D and innovation capabilities were insufficient; the competitive pattern in the automotive cockpit electronics industry deteriorated; the construction progress of the project fell short of expectations and the expected benefits after commissioning