Incident: On June 26, 2024, the company issued an announcement. Debon Import & Export, a wholly-owned subsidiary of the company, recently received a fixed project letter from NIO Auto. Debon Import and Export will be NIO Auto's supplier to develop and supply headlight controllers according to its needs. The project cycle is from 2025 to 2028. During the project period, the headlight controller products provided by the company are estimated to involve a total amount of about 143 million yuan.
Actively develop the automotive business, focusing on “vehicle controller+vehicle lighting”. The company officially launched the automotive lighting business in 2018, and later clarified the automotive business development strategy focusing on “vehicle controller+vehicle lighting”. Currently, the company has successfully mass-produced automotive headlight controller (LDM) products and installed them in some customer models, and the LDM business has maintained rapid growth. This time, NIO Auto's project has been targeted, and the company's vehicle controller business is expected to further accelerate development.
Epitaxial endogenous progress, and in-vehicle business capabilities are constantly being improved. Through the acquisition of Shanghai Liangqin and Wuhan Liangxinpeng, the company entered the field of automotive lighting structural parts, and after the acquisition, the company developed many new customers in the structural parts business, such as Zero Run, Sanli, Hella, etc., and also carried out production line technical reforms and plant expansion, and production capacity was greatly increased. At the same time, the company actively developed and supplied BMS products for the Wanxiang 123 project in 2021. The products will be used in some Porsche and Audi models. Currently, the company has a large number of orders. According to the company's announcement, the automotive business will add more than 1 billion yuan in targeted projects in 2023. The terminal brands involved include Porsche, Audi, Volkswagen, Nissan, Daihatsu, Toyota, Ideal, GAC, Zero Run, Changan, and Geely.
The competitive advantage of the main general lighting business is gradually being strengthened, and the company's ability to grow is constantly being strengthened. General lighting is the company's traditional main business. According to the company's announcement, China is the world's largest producer and exporter of lighting products, but the competitive pattern of the industry is scattered. Currently, as domestic lighting companies continue to reduce costs and increase efficiency, their cost, scale and price advantages are gradually showing. International lighting giants have gradually divested their lighting manufacturing business. At the same time, domestic small and medium-sized enterprises are speeding up their clearance. Leading domestic enterprises with supply chain advantages, manufacturing advantages and financial strength will further accumulate market share and further increase market concentration. As a leading domestic general lighting company, the company's market share is expected to increase further.
Profit forecast and investment advice: As a leader in general lighting, the company is expected to gain greater advantages in the context of industry clean-up, and the company is actively developing a new growth curve for the automotive business, and the business scale is expected to continue to grow. We expect the company's revenue for 2024-2026 to be $54.88, 6371, and 7.299 billion yuan, respectively, and corresponding net profit to mother of 454, 562, and 689 million yuan, respectively. Based on the closing price of 11.48 yuan on June 28, 2024, the corresponding PE was 12.06, 9.74, and 7.95 times, respectively, maintaining the “buy” rating.
Risk warning: risk of vicious competition in the market, risk of shortage of raw materials and price fluctuations, risk of exchange rate fluctuations, risk of logistics instability.