On the evening of August 20, the company released its 2024 semi-annual report. The first half of 2024 achieved revenue, net profit to mother, net profit after deducting 11.692, 0.838, and 0.79 billion yuan respectively, of +34.02%, +38.11%, and +49.66% year-on-year, respectively; gross sales margin of 20.33%; and net sales margin of 7.24%.

2024Q2's net revenue and profit both increased, and profitability gradually increased. 2024Q2 achieved revenue, return to mother, and deduction of 6.045, 0.454, and 0.419 billion yuan respectively, of +27.50%, +64.05%, and +77.30% year-on-year respectively, and +7.03%, +17.90%, and +13.13%, respectively. Gross profit margin 21.25%, +0.96pct year on year, +1.91pct month on month; net profit margin 7.55%, +1.72pct year on year, +0.65pct month on month.

Smart cockpit: In the first half of 2024, the smart cockpit business achieved revenue of 7.965 billion yuan, +27.43% over the same period last year.

Intelligent cockpit domain control: The company's third-generation smart cockpit domain controller has been mass-produced on a large scale on many customer models such as Ideal Auto, Chery Auto, GAC Passenger Vehicle, etc., and has received orders for new projects from customers such as Chery Automobile, Geely Automobile, and GAC Toyota. The fourth-generation smart cockpit domain controller has been mass-produced on customer models such as Ideal Auto, and continues to receive orders for many new projects such as Ideal Auto, Guangzhou Automobile Passenger Vehicle, and Geely Auto. In addition, more differentiated cockpit domain control solutions have been targeted by car companies for new projects, such as the “flagship extended version” of the fourth-generation smart cockpit series.

Infotainment systems, display systems, and LCD meters: As the global market share is expanding, new customer projects obtained have targeted expansion into various international markets such as Europe, Japan, and Southeast Asia. Currently, the infotainment system has been designated for new projects from customers such as GAC Aian, GAC Passenger Vehicle, Great Wall Motor, MAZDA, and Toyota Indonesia; the display system has received orders from customers at home and abroad such as Chery, Geely, Great Wall, Volkswagen, Toyota, CEER, SEAT, Audi, CAT, etc., and LCD instruments have been designated for new projects from GAC Aian, GAC Passenger Vehicle, FAW Toyota, STELLANTIS, CAT, etc.

Body domain control and other new products: Body domain controller products have been mass-produced, and new project orders have been received from customers at home and abroad such as Ideal Auto, Chery Auto, and PROTON; HUD products and electronic rearview mirror products have received new customer project orders one after another.

Intelligent driving: In the first half of 2024, the intelligent driving business achieved revenue of 2.667 billion yuan, +45.05% over the same period last year.

High-computing intelligent driving domain control: It has been mass-produced on a large scale for customers such as Ideal Auto and Extreme Krypton Auto, and has received orders for new projects from many mainstream customers such as Toyota Motor, Great Wall Motor, GAC Aian, SAIC-GM, and Dongfeng Nissan, and the revenue scale continues to increase.

Lightweight intelligent driving domain control: It has been designated for new projects by customers such as Chery Automobile and FAW Hongqi.

Based on the development of next-generation high-computing power central computing platform chips, 2024Q2, the company signed a cooperation agreement with Long-term Intelligence to jointly build an in-vehicle central computing platform to accelerate the implementation and mass production of integrated automotive central architectures and related components; the company also signed a tripartite cooperation agreement with Haobo and NVIDIA to jointly develop L4 class intelligent driving technology with integrated cabin driving to jointly promote the construction of L4 mass-produced cars to provide power support for advanced autonomous driving functions, confidence view, digital clusters and AI cockpits; among them, according to the company's WeChat account, Hobo plans to mass produce in 2025 L4 models achieve 2000TOPS computing power.

2024H1, the company released a new generation of high-performance CRD03P angle radar, which can meet L2+ level intelligent driving sensing requirements; it also lays out a series of sensor products such as FRD02 cascade imaging radar, FRD03 forward millimeter wave radar, and CRD03E angle radar to target all-scene urban NOA to provide sensing support for advanced intelligent driving; among them, the company's millimeter wave radar products have received orders for new projects from Chery Automobile, Guangzhou Automobile Passenger Vehicle, GAC Toyota, etc.

Internet services: In the first half of 2024, online services and other businesses achieved revenue of 1.06 billion yuan, +66.90% compared to the same period last year. The company's OTA solutions, intelligent entry, and cockpit ecosystem services continue to be upgraded and iterated, and has received orders for new projects from leading domestic and foreign car companies such as Ideal Auto, Chery Auto, CEER, Changan Automobile, FAW Toyota, and GAC Toyota.

New production capacity: The company's Desai Xiwei Midwest base project was officially launched in Chengdu, the Huinan Phase II smart factory was officially opened, a groundbreaking ceremony was held for Desai Xiwei European New Technology Park, and a groundbreaking ceremony was held for Desai Xiwei's smart factory in Spain. Among them, the first phase of the European New Technology Park project, which includes an office building and a 3D antenna measurement room, is expected to be completed and opened in August 2025; the Spanish smart factory is expected to be completed by the end of 2025, and a series of intelligent products in the fields of smart cockpits and intelligent driving will begin to be supplied to customers in 2026. Among them, in-vehicle display products will be the first to be put into production.

Investment suggestions: The company's smart driving and smart cockpit products continued to grow rapidly. The gross sales margin and net margin both increased month-on-month in the second quarter, the customer structure continued to be optimized, and the leading advantage was highlighted. The company's net profit to mother is estimated to be 2.187 billion yuan, 2.644, and 2.975 billion yuan respectively in 2024, 2025, and 2026, corresponding to 22.6, 18.7, and 16.6 X PE, respectively. Highly recommended!

Risk warning: Overseas market expansion falls short of expectations, and the increase in profitability falls short of expectations.