The acceleration of high-voltage fast charging is expected to continue to accelerate the penetration of electric vehicles. As a core manufacturer in the midstream industry chain, the company's growth is certain. 1) Vehicle power supply leaders: Optimistic that terminal demand will drive the volume of upstream components, and the company is expected to fully benefit as a leader in the sector. 2) Long-term layout in line with industry trends: with vehicle power supplies as the core, developing “electric drive+liquid-cooled charging piles” related businesses up and down to provide multi-dimensional support for the company's long-term performance development.

High-voltage fast charging is still the key to driving electrification penetration. Judging from market feedback, the “cost+technology” dilemma may improve, and I am optimistic that the stagnation will break through. China's EV penetration rate has fluctuated in a range since '23. The main factors are high cost and difficult technology application. However, at this stage, there are the following benefits:

1) Reduced SiC costs: On the one hand, costs are reduced as the domestic raw material supply chain continues to improve; on the other hand: integration reduces the number of components used; 2) car companies are entering the market one after another: judging from the announced model prices and quantities, 800V high voltage has already been submerged from high-end models. In the next stage, B/C class cars may become mainstream. Looking at mid-range and low-end models may also have application needs in the long run.

Vehicle power supply: Fully benefiting from the replacement of power components, the trend of volume and price increase is clear under the leading edge.

1) Volume: In the short term, the growth trend of strategic customers is strong; 2) Price: “SiC+ integration” boosts bicycle value. At the same time, the company's leading “magnetic integration” technology industry has significant cost advantages, and has a higher gross margin compared to listed companies in the same industry.

Electric drive system: The trend of industry integration is clear, and the company's entry into the electric drive system helps the deep integration of “power supply+electric drive”. Under the “all-in-one” integration trend, the epitaxial electric drive business helps enhance product richness and consolidate the company's leading position in automotive power supplies.

Liquid-cooled charging pile module: Target DC charging piles to complement each other in coverage areas, and is optimistic that high-margin products will take advantage of fast charging to drive strong performance growth. The company's core business vehicle power supply application range is AC charging piles. Following the trend of high voltage fast charging, DC charging piles may be mainstream in the long term. The company's forward-looking layout is optimistic that high-margin products will bring strong growth in the company's performance.

Investment suggestions: Considering that the company is a leader in the automotive power supply industry and a midstream core manufacturer in the new energy vehicle industry chain, we expect the company's revenue to reach 6.9/8.2/9.6 billion yuan in 2024-2026, respectively, and net profit to mother of 0.611/0.808/0.903 billion yuan, respectively. The corresponding PE is 13x/10x/9x, respectively. The first coverage is given a “buy” rating.

Risk warning: demand for new energy vehicles falls short of expectations; industry competition intensifies; production capacity construction of fund-raising projects falls short of expectations; technology iteration falls short of expectations.