The leading domestic investor in automotive wiring harnesses may have reached an inflection point in performance
The company was founded in 1997 and has been deeply involved in the wire harness field for more than 20 years, and is the domestic leader in domestic wire harnesses in China. The company's forward-looking layout began adding new high-voltage wiring harnesses. It was the first designated high-voltage wiring harness in 2016. It has now formed a multi-dimensional product matrix such as customized vehicle wiring harnesses, high-voltage wiring harnesses, instrument panel harnesses, engine wiring harnesses, car body harnesses, door harnesses, roof and rear harnesses.
The leading domestic investor in low-voltage wiring harnesses is deeply tied to Cyrus. The core customer volume helps Ascend Electric to increase the number of electronic components in automobiles, driving an increase in the amount of wiring harness used. At the same time, intelligence places higher demands on the data transmission rate of wiring harnesses. High transmission rate wiring drives the value of bicycles to further increase, and the double rise in volume and price further opens up market space. The domestic low-voltage wiring harness market is currently dominated by foreign giants. The entry barriers are high, and the supply system is relatively closed. With leading forward R&D and design capabilities, the company has successively obtained excellent supplier qualifications from many OEMs such as Volkswagen, Audi, and SAIC Motor, breaking through supplier barriers and becoming a leading domestic wiring harness supplier enterprise. With the release of the M7 and M9 in '24 and the introduction of new models one after another, the company is expected to benefit greatly as a supplier to Cyrus. Currently, the company continues to break through into foreign-funded and independent new energy brands, has been recognized by internationally renowned manufacturers such as Mercedes-Benz and North American T, and has entered the supply chain of new car builders such as Ideal and Smart Self. The customer structure continues to be optimized. High-quality customer resources are combined with the core competitiveness of the product, and the company's performance is expected to take off again.
Forward-looking layout of high-voltage wiring harnesses, new energy helps performance take off again
The power source for new energy vehicles is different from traditional fuel vehicles. In particular, electric vehicles use a three-electric system to replace the fuel engine system. High-voltage wiring harnesses serve as a link between the three core components of a new energy electric vehicle: the power battery, the drive motor, and the high-voltage control system. The company lays out the new energy high voltage wiring harness business ahead of time. With rich experience in traditional wiring harness research and development and a high-quality downstream customer base, the company has successively won orders from leading new energy manufacturers such as Ideal, Cyrus, and North American T Company, and has gradually established a leading position in the industry. The company strategically lays out the southwest region to enhance supporting supply and rapid response capabilities, and accelerate market share. Demand from downstream customers continues to rise, and the company has successively raised capital to build production capacity to support order growth and broaden the company's growth boundaries. Currently, high-voltage wiring harnesses have become the core of the company's development strategy. With the accelerated penetration of new energy sources and the rise of independent brands one after another, the company is expected to enjoy the dividends of domestic substitution as a domestic wire harness leader. As the high-voltage wiring harness business continues to expand, it is expected to open up a second growth curve in the company's performance.
Investment advice: We expect the company to achieve revenue of 6.979/9.243/11.679 billion yuan in 2024-2026 and achieve net profit of 0.504/0.704/0.902 billion yuan. The current market value corresponds to 2023-2025 PE 25 /18/14 times. The company brought new growth room to the leading domestic investor in automotive low voltage wiring harnesses and accelerated implementation of high voltage wiring harnesses. It gave 25-30x PE in 24 years, corresponding to a target price of 28.75-34.5 yuan, covering the first time and giving it a “buy” rating.
Risk warning: Gross margin declined due to rising raw material costs exceeding expectations; sales of new energy vehicles fell short of expectations to downstream demand; new product expansion and fixed increase production fell short of expectations; and the company failed to disclose performance forecasts in accordance with regulations.