Company Overview: Deeply involved in the automotive chassis field and actively expand new robotics businesses. The company's auto parts business is divided into three major segments: chassis parts, air conditioning compressors, and aluminum alloy lightweight business. In 2023, the company will seize the wave of globalization in the humanoid robot industry and develop and produce screw products for humanoid robots in small batches, namely planetary roller screws and trapezoidal screws. 2024Q1's total revenue was 490 million yuan, +25.97% year-on-year, mainly benefiting from the expansion of the company's product categories. At the same time, the company's gross margin stabilized at 17%-19%, and the expense ratio was properly controlled during the period.

Chassis parts: The company's cornerstone business, the precision processing segment is growing steadily. The company's chassis parts are divided into four types: steering gear parts, shock absorber parts, differential parts, and high-precision parts. Among them, high-precision parts involve components such as suspensions in driving systems and brakes in braking systems. The barriers are relatively high. The company's precision processing business sales CAGR reached 34.28% in 21-23. Line control: Bosch is the absolute leader, with a domestic load rate of over 37% in '23, and the domestic market is expected to reach 11.6 billion yuan in '25. Wire control shift: The domestic market reached 8.9 billion yuan in 25 years, and the total share of Bosch, NSK, and ZF exceeded 55%. As a tier-2 chassis segment leader, the company's steering gear rack and shock absorber piston rod are in a leading position in the industry. With excellent machining capabilities, the company can quickly respond to the diverse product needs of downstream customers, and is closely tied to major customers such as Bosch and ZF, and is expected to continue to benefit as leading customers expand.

Lightweight business: High-growth business, rapid expansion of forging & control arm projects. The aluminum alloy lightweight market continues to expand. The amount of aluminum used for bicycles in China has increased from 61 kg in 2005 to 190 kg in 2020. According to the goals of the “Energy-saving and New Energy Vehicle Technology Roadmap”, the amount of aluminum used in bicycles in China will reach 350 kg in 2030. As a lightweight, high-strength material, aluminum-magnesium alloy has an excellent strength-to-weight ratio, corrosion resistance and plasticity. It has gradually become one of the mainstream choices to replace traditional steel, and lightweight development is trending. The company's current main customers include well-known domestic and foreign automakers such as BYD, ZF (ZF), and Sachs, and has acquired new products such as integrated valve terminals and control arms for more models from BYD. The company's aluminum alloy forging capacity expansion project has been mass-produced, with an annual production capacity of 1 million units. The second production line has been installed. It is expected to be put into operation in June '24, with a production capacity of 900,000 units; the control arm assembly project is expected to be put into operation in August '24.

Screws for humanoid robots: high barriers, large space, next growth curve. Take the Tesla humanoid robot Optimus as an example. The execution system is an important part of it, mainly including linear and rotating actuators and hand joints. Among them, screws are widely used in linear joints and technical barriers are high. As subsequent humanoid robots are expected to gradually enter the mass production stage, domestic suppliers are expected to benefit from entering the supply chain. The company can provide two types of products: planetary roller screws and trapezoidal screws. On April 15, 2024, the company announced foreign investment and the establishment of a wholly-owned subsidiary “Shanghai Beite Robot Parts Co., Ltd.” to manufacture, develop and sell robot parts, which is expected to create the company's next growth curve.

Profit forecast: The company has been deeply involved in the automotive chassis field for many years, and its products have expanded into high-precision parts, lightweight parts and screw business. We expect the company's 2024-2026 revenue to be 21.73, 27.48, and 35.37 billion yuan, +15.50%, 26.47%, and 28.70% year over year; net profit to mother of 0.76, 1.17, and 175 million yuan, +49.63% year-on-year. Based on the closing price of June 20, 2024, the company's current market value is 6.694 billion yuan, corresponding to 2024-2026 PE being 88.1X, 57.4X, and 38.3X respectively. Considering the high barriers of humanoid robot components, the first coverage gave a “gain” rating.

Risk warning: Downstream customer overseas expansion falls short of expectations, risk of humanoid robot development falling short of expectations, risk of impairment of goodwill, risk of untimely updating of research report usage information data.