Core views

In the first half of 2024, we achieved revenue, net profit attributable to mother, net profit after deducting net profit of 116.9.2, 0.838, and 0.79 billion yuan, with year-on-year increases of 34.02%, 38.1%, and 49.7%. Q2 achieved revenue, net profit attributable to mother, and net profit excluding non-return to mother of 6.045, 0.454, and 0.419 billion yuan, with year-on-month increases of 7.03%, 17.9%, and 13.13%, respectively. The company is a leading domestic intelligent driving domain controller, and has plenty of orders in hand. Benefiting from the increase in intelligent penetration rate and the sharp rise in volume and price brought about by domain control product upgrades, the company's growth is highly certain. The estimated net profit for 2024-2025 is 2.096 and 2.685 billion yuan. Current PE stock prices are 32X and 25X, respectively, maintaining a “buy” rating.

occurrences

The company released its 2024 interim report: In the first half of 2024, it achieved revenue, net profit attributable to mother, net profit after deduction of 11.692, 0.838, and 0.79 billion yuan, an increase of 34.02%, 38.1%, and 49.7% over the previous year.

Brief review

The three major businesses continue to gain strength, and new products and new projects continue to be launched. In the first half of 2024, we achieved revenue, net profit attributable to mother, net profit after deducting net profit of 11.692, 0.838, and 0.79 billion yuan, with year-on-year increases of 34.02%, 38.1%, and 49.7%. By business, smart cockpit, intelligent driving, connected services, and others achieved revenue of 7.965, 2.667, and 1.06 billion yuan respectively, accounting for 72.13%, 20.47%, and 7.40% of revenue, respectively, with year-on-year increases of 27.42%, 45.02%, and 66.93%. Among them, Q2 achieved revenue, net profit attributable to mother, and net profit excluding non-return to mother of 60.4.5, 0.454, and 0.419 billion yuan, with year-on-month increases of 7.03%, 17.9%, and 13.13%, respectively. The increase in performance in the first half of '24 was due to an increase in sales scale. Customers such as Ideal, Chery, and Extreme Krypton increased significantly. At the same time, the company's three major businesses continued to gain strength. In terms of smart cockpits, the third-generation smart cockpit domain controller has been mass-produced on a large scale on many customer models such as Ideal Auto and Chery Auto, and has received orders for new projects from customers such as Chery Auto. The fourth-generation smart cockpit domain controller has been mass-produced by customers such as Ideal Auto, and continues to receive orders for many new projects such as Ideal Auto. In terms of intelligent driving, intelligent driving domain controllers with high computing power have been mass-produced on a large scale for customers such as Ideal Cars and Extreme Krypton Motors, and have received orders for new projects from many mainstream customers such as Toyota Motor. In addition, the company's lightweight intelligent driving domain control products have been designated for new projects by customers such as Chery Automobile and FAW Hongqi.

The gross margin improved month-on-month, and the ability to control capital was enhanced. The company's gross profit margin, net profit margin, and period expense ratio for the first half of 2024 were 20.33%, 7.24%, and 12.67%, respectively, and -0.33, +0.29, and -1.58pct, respectively. The gross profit margin of the smart cockpit business is 19.60%, the gross profit margin of the intelligent driving business is 18.94%, and the gross profit margin of connected services and other businesses is 29.25%. The sales expense ratio, management cost rate, R&D expense ratio, and financial expense ratio for the first half of the year were 1.09%, 1.87%, 8.95%, and 0.76%, respectively. Q2 The company's gross profit margin, net profit margin, and period expense ratio were 21.25%, 7.55%, and 12.40%, respectively, +1.91, +0.64, and -0.56pct, respectively.

New products strengthen competitiveness and accelerate the pace of internationalization. 1) The company has signed strategic cooperation agreements with Long-term Intelligence and Haobo to jointly promote the accelerated implementation of next-generation cabin driving integration and even central computing platforms to meet the needs of L4 high-level autonomous driving software and hardware systems. 2) In the first half of 2024, the company released a new generation of high-performance CRD03P angle radar. At the same time, the company also deployed a series of sensor products such as FRD02 cascade imaging radar, FRD03 forward millimeter wave radar, and CRD03E angle radar to provide sensing support for advanced intelligent driving. 3) Desai Seaway Europe New Technology Park held a groundbreaking ceremony in Weimar, Germany, and the first phase of the project has now been launched. At the same time, Desai Siwei Europe has set up its first office in Paris, France, and the Spanish smart factory project has been successfully launched.

Investment advice

The company is the leading intelligent driving domain controller in China, and has plenty of orders in hand. The company continues to upgrade cockpit domain controllers and driving domain controllers, and develops new products such as body domain controllers and AR-HUD to further enrich the product line. Benefiting from the increase in intelligent penetration rate and the sharp rise in volume and price brought about by domain control product upgrades, the company's growth is highly certain. The estimated net profit for 2024-2025 is 2.096 and 2.685 billion yuan. The current PE stock prices are 32X and 25X, respectively, maintaining a “buy” rating.

Risk analysis

1. The industry boom falls short of expectations. Demand and future industry sentiment may fluctuate in anticipation of a decline in policy support in 2024.

2. The competitive pattern of the industry has deteriorated. Domestic and foreign parts suppliers compete. With changes in supply factors such as technological progress and new production capacity investment, industry competition may intensify in the future, and the company's market share and profitability may fluctuate.

3. The progress of customer development and mass production of new projects fell short of expectations. The company accelerates the expansion of new customers. Considering the fluctuation in the R&D pace of new model projects of car companies, there may be fluctuations in the fixed project cycle within a specific period of time; in addition, the mass production schedule falls short of expectations due to the company's new production capacity construction or being affected by uncontrollable factors.