Incident: On September 6, the company announced the “2024 Plan to Issue A Shares to Specific Targets”, which plans to issue shares to no more than 35 people (including 35) of specific targets.

The details include:

Amount raised: no more than 4.5 billion yuan (including the number of copies)

Number of shares issued: no more than 30% of the total share capital of the company before the current issuance, that is, no more than 166,501,830 shares (including the number of shares)

Recruitment purposes:

1) Desai Seaway Automotive Electronics Midwest Base Construction Project (Phase I): The total investment is estimated at 1.96 billion yuan, with an estimated investment of 1.8 billion yuan. The construction period of the project is 48 months, mainly to build a plant in Chengdu to produce smart cockpit series products such as instruments, central control displays, and cockpit domain control platforms; 2) Smart vehicle electronic systems and components production project: the total investment is expected to be 2.912 billion yuan, with a proposed capital of 1.98 billion yuan. The construction period of the project is 60 months, mainly for use in Huizhou Introduce advanced production equipment and recruit highly qualified and experienced production and management personnel to expand the production capacity of automotive electronics products;

3) Intelligent Computing Center-Class Integrated Driving Platform R&D Project: The total investment is expected to be 0.871 billion yuan, and the capital raised is 0.72 billion yuan. It is planned to carry out construction in Huizhou and Chengdu. The construction period is 36 months. Among them, the Intelligent Computing Center mainly provides computing power support for the development of advanced intelligent products involved in the company's current targeted orders for new customer projects; the cabin driving integration platform R&D project is a forward-looking layout for software and hardware integration, integration of advanced intelligent functions, and integrated cabin and parking technology.

We believe that the company's fixed increase in production shows sufficient confidence in ongoing orders and subsequent orders.

As of 24H1, the public, central and western base projects were officially launched in Chengdu, Huinan Phase II smart factory was officially opened, and Desai Xiwei's smart factory in Spain was held. The company is building manufacturing capabilities in many regions around the world, boosting confidence for subsequent domestic and overseas orders.

Profit forecast and investment advice: Driven by the high popularity of automobile intelligence, the company is expected to further benefit as a leading domestic controller manufacturer. At the same time, with the improvement of the company's overseas factory construction progress, it is expected to further increase the company's overseas performance revenue and go hand in hand with the domestic market. The company is expected to achieve revenue of 28.57/35.981/44.28 billion yuan in 24-26, achieve net profit of 2.062/2.718/3.472 billion yuan, and EPS of 3.71/4.90/6.26 yuan/share respectively, giving the company 24-year PE 35X, maintaining a target price of 129.85 yuan, and maintaining a “buy” rating.

Risk warning: downstream customer sales fall short of expectations; overseas market progress falls short of expectations; product implementation falls short of expectations; risk of exchange rate fluctuations.