Core views:

Long-term logic: Global production capacity linkage meets the trend of electrification and territalization, and the incremental business, mainly the battery box business, accelerates expansion. On the demand side, the European electrification trend is not changing, and local factory construction is the general trend; on the supply side, the company strategically lays out global production capacity, and the business represented by battery boxes is expected to rapidly expand with the comparative advantages of production routes and advantages such as low cost, complete process, sufficient production capacity, and rich customer base.

Mid-term logic: The further development of the traditional exterior parts business drives endogenous growth under the trend of intelligence and integration. With the trend of intelligent and electrified automobiles, the value of automobile exterior parts and bicycles has increased, driving the continuous increase in the size of the exterior parts market. The company's exterior parts business is expected to grow steadily with advantages such as mature technology, patent thresholds, and vertical industry chains.

Short-term tracking: ① Revenue side: The exterior parts business is under pressure from downstream customers. The increase in the market share of new energy for downstream customers in the battery box business drives the company's performance growth; ② Cost side: gross margin benefits from a decline in overseas production capacity in the short term and a decrease in depreciation and amortization growth; ③ Cost side: the cost rate is pressured by rising sea freight rates in the short term, and there is room for further compression in the long run.

Profit forecasting and investment advice: After major changes in the industry over the past few years and the company's own corresponding adjustments, looking forward to the future. Driven by endogenous growth, the release of incremental component production capacity, and the trend of global localization, it is expected to usher in a new upward cycle. However, in the short term, continued improvement in the company's operating conditions will push the company's valuation back to a reasonable level. EPS for 2024-2026 is expected to be 1.99/2.52/3.42 yuan/share, respectively, giving the company 12 times PE in 2024, and a corresponding reasonable value of HK$26.43 per share, giving it a “buy” rating.

Increased risk: Industry sentiment is declining, overseas factories' production capacity climbing progress falls short of expectations, raw material prices have risen, and shipping costs have risen.