Desai Seaway announced the 2024 third quarter results: 24Q3 achieved revenue of 7.28 billion yuan, +27% year over month; net profit to mother of 0.57 billion yuan, +61% year over month, +25% month on month; gross profit margin 20.9%, +2.2 pcts year on year, -0.3 pcts month on month; net profit margin 7.84%, +1.7 pcts year on month, +0.3 pcts month on month.

It focuses deeply on the development of the three major businesses: smart cockpit, intelligent driving, and connected services. In terms of smart cockpits, 1) 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, Guangzhou Automobile Passenger Vehicle, and Geely Automobile. 2) The “flagship extended version” of the fourth-generation smart cockpit series integrates intelligent software algorithms such as parking, head-up display, and external amplifiers developed by the company. Using the platform's powerful AI computing capabilities, it integrates in-cabin human-computer interaction sensing, and can achieve richer internal and external functions. 3) HUD products and electronic rearview mirror products have received new orders one after another.

Diversified smart driving domain control solutions based on different computing power strongly support the continuous growth of the intelligent driving business.

High-computing intelligent driving domain controllers have been mass-produced on a large scale for customers such as Ideal Auto, Extreme Krypton, etc., and have received new project orders from many mainstream customers such as Toyota Motor, Great Wall Motor, SAIC GM, and Dongfeng Nissan; lightweight intelligent driving domain control products have been recognized by many customers, and have been targeted for new projects by customers such as Chery Motors and FAW Hongqi. Based on the development of next-generation high-computing power central computing platform chips, strategic cooperation agreements have been signed 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.

Profit forecast and investment advice: We expect the company's 2024/25/26 revenue to be 27.6/34.6/42 billion yuan, net profit to mother 2.039/2.667/3.368 billion yuan, and EPS of 3.67/4.81/6.07 yuan. Referring to comparable companies, the company was given 26~31x PE in 2025, corresponding to a reasonable value range of 124.9 to 149.0 yuan, maintaining a “superior to the market” rating.

Risk warning: Intelligent progress falls short of expectations, chip prices are rising, and demand for passenger cars is falling.