Intelligence accelerates the upgrading of car lights, and the 100 billion market space is vast. Car lights are a golden track in the automotive sector. With the support of light source upgrades (halogen-xenon-LED/OLED/laser) and intelligence (AFS-ADB-DLP), the value of bicycles has increased exponentially. ADB can automatically switch between near and far lights, can prevent glare, and has stronger recognition capabilities. It is currently the mainstream solution for smart car lights. Starting in 2023, new energy companies such as Tesla, Huawei, and Xiaomi are willing to deploy them, and traditional joint ventures have been launched one after another. More advanced smart car lighting systems can also collect and analyze lane information, detect incoming vehicle distance, and assist in identifying and handling emergencies. DLP headlights are still in the early stages of development. The cost of core components is high, and some models are available as options. According to Moderintelligence data, considering upgrades such as light sources and intelligence, it is estimated that by 2027, the global automotive lighting market will reach 48.11 billion US dollars (equivalent to RMB 349.76 billion), with a compound growth rate of 6.55% with high barriers and high concentration, with clear echelons and autonomous breakthroughs. Car lighting technology is difficult, quality requirements are high, customer certification cycles are long, and R&D investment is large. Participating companies need to have good cost control capabilities and the ability to develop simultaneously with OEMs. The entry threshold is high, the market is highly concentrated, and there is a clear hierarchy among competitors. According to Marklines data, in 2023, Koito, Valeo, Marelli, Hella, and Stanley shared 20%, 16%, 12%, 11%, and 11% of the headlamp market, respectively.
As joint ventures increase their demand for localized procurement, autonomous car companies are speeding up the cultivation of supply systems. An excellent independent lighting company represented by Xingyu, has good quality, excellent technology, high efficiency, and cost advantages. From 2018 to 2023, the company's products and customers made rapid breakthroughs, and its market share increased from 10% to 14%.
Deeply cultivated domestically, laid out in Europe and America, and globalization progressed steadily. The company focuses on R&D, capital investment, talent introduction and external cooperation (hand in hand with Horizon, Huawei) to rapidly narrow the technological gap with overseas, upgrade light sources from halogen and xenon to LED/OLED, and make breakthroughs in products from small lights and taillights to headlights. Smart car lights such as ADB and DLP have been mass-produced. The company makes its own parts, has outstanding advantages, and covers a wide range of client car companies. From 2009 to 2020, the company grasped the development opportunities of joint ventures in domestic product upgrades and supply chain opening, and achieved a leapfrog increase in scale and profitability. With the wave of electrification in 2021-2023, the company quickly reached in-depth cooperation with new forces, Huawei, etc., and won a number of high-quality high-end projects. The company has entered the supply chain for foreign luxury brands. With the release of production capacity in European factories and the registration of Mexican Xingyu and American Xingyu, the company's global development has entered a new stage.
Profit forecast: In 2024-2026, the company is expected to achieve operating income of 129.5/161.6/20.04 billion yuan, a year-on-year increase of 26.3%/24.8%/24.1%, and net profit of 15.0/19.2/2.47 billion yuan, respectively. The year-on-year increase is 36.0%/28.4%/28.2%, corresponding to 21/17/13 times PE, covering for the first time, and giving a “buy” rating.
Risk warning: LED headlight penetration rate may be lower than expected; headlight gross profit improved or did not meet expectations; industry growth rate may be lower than expected; related measurement errors.