Description of the event

Incident: On August 22, Joyson Electronics released its 2024 semi-annual report. In 2024, H1 achieved operating income of 27.08 billion yuan, +0.24% year over year; realized net profit of 0.64 billion yuan, +33.9% year on year; realized net profit of 0.64 billion yuan without return to mother, +61.2% year on year.

Incident reviews

The company's various businesses are growing steadily, and the automotive safety business is growing significantly. The company's new business orders maintained strong growth in the first half of the year. H1 received about 50.4 billion yuan in new orders, of which new energy related orders exceeded 30 billion yuan, accounting for more than 60%. H1's various businesses have continued to advance steadily. The automotive safety business achieved revenue of 18.8 billion yuan, and the total life cycle amount of new orders was about 39.8 billion yuan. As business continued to improve in Europe and America, automobile safety business performance increased sequentially over several quarters, with significant performance growth; the automotive electronics business achieved revenue of 8.13 billion yuan, and H1 obtained a total life cycle amount of about 10.6 billion yuan for new orders. As of July, the total life cycle amount of new orders received by the company has exceeded 63 billion yuan, of which the automotive safety business has received more than 45 billion yuan, and the automotive electronics business has received more than 18 billion yuan.

The company's profitability continues to grow. The gross margin of H1 in 2024 was 15.5%, +2.1pct year on year. Among them, the gross margin of the automobile safety business was 13.9%, +3.3pct year on year, and the gross margin of the automotive electronics business was 19.4%, which remained stable. Domestic gross margin was 18.3%, +2.3 pct year on year, while foreign gross margin was 14.8%, +2.1 pct year on year. In terms of production capacity, the first phase of the new automobile safety industrial base project in Hefei was officially completed and put into operation in the second half of 2023. It will achieve production capacity of 4 million steering wheels per year and 10 million airbags per year. Currently, based on the rapidly growing business needs of leading domestic independent brands, every effort is being made to ensure customer supply.

The global layout has a first-mover advantage, empowering Chinese car companies to go overseas. The company continues to promote the optimal layout of global production capacity, promote the transfer of production capacity to the best cost countries and regions, and improve the utilization rate of production capacity in Europe and America. The company has been deeply involved in overseas regions such as Southeast Asia, Mexico, and Hungary for many years. It can quickly respond to the overseas needs of Chinese car brands and empower Chinese car companies to carry out overseas layout. As Chinese independent brands and new power brands target European and Southeast Asian markets and expand overseas, the company has now received orders for many independent brand overseas projects, and has negotiated local cooperation with some leading domestic brands to land in overseas markets. The company increases the flexibility of performance growth through continuous optimization and improvement of the global supply chain.

Investment advice

The company's net profit for 2024-2026 is estimated to be 1.56/2.07/2.61 billion yuan respectively, corresponding to the company's closing price of 13.91 yuan on September 10, and the 2024-2026 PE is 12.8\ 9.6\ 7.6, respectively, maintaining the “buy-A” rating.

Risk warning

Downstream demand fell short of expectations, capacity release fell short of expectations, and project progress fell short of expectations.