Intelligent product layout, diversified customer structure development Desai Xiwei deeply focuses on the efficient integration of various fields of automotive intelligence. The business covers smart cockpit and intelligent driving. The company was founded in 1986 and entered the business breakthrough stage in the field of intelligence in 2020. Revenue for the first three quarters of 2024 increased 31.13% year over year. The smart cockpit and intelligent driving business grew significantly, with 2024H1 accounting for 68.12% and 22.81% of total revenue, respectively.

As a leading company in the automotive electronics industry, the company has established cooperative relationships with many domestic and foreign car companies. Domestic business accounts for more than 80% of revenue, and foreign business is also growing rapidly. Desai Seaway builds a balanced and healthy customer structure through a global service system and multi-channel market development.

Smart cockpit: A rich range of products, exploiting overseas market opportunities. In 2023, the annual sales volume of new smart cockpit business project orders exceeded 15 billion yuan, and continued to make breakthrough progress in overseas markets. 2024H1's smart cockpit business revenue was 7.965 billion yuan, up 27.43% year over year. The third-generation high-performance smart cockpit products with cockpit domain control continue to expand and become the main driving force for the growth of the smart cockpit business. Fourth-generation smart cockpit products have more powerful performance and richer functional configurations, and have been mass-produced and delivered one after another. In addition to being deeply involved in the domestic market, the infotainment system, display system, and LCD instrument business continues to explore major international markets such as Europe, Southeast Asia, Japan, and North America. In terms of new products, the body domain controller has been mass-produced; the HUD business has been targeted for the project.

Intelligent driving: leading domain control industry, diverse product solutions

The company's intelligent driving business sales and new project order scale continued to explode. Revenue for the full year of 2023 increased by about 74% year-on-year, and the annualized sales of new project orders exceeded 8 billion yuan. The 2024H1 intelligent driving business revenue was 2.667 billion yuan, up 45.05% year on year. The company's smart driving domain control products ranked first in the industry, with a market share of 23.90% from January to August 2024. The company's product matrix will cover more computing power ranges to meet a wider range of market needs. The high computing power platform has been mass-produced to support many car companies such as Ideal Auto, Xiaopeng Auto, Lotus Technology, GAC Aeon, and JiKrypton Auto, providing strong support for the intelligent driving business to maintain rapid growth. The lightweight intelligent driving domain controller IPU02 will launch more new solutions to suit the largest market segment of the domestic car market, which is the medium to medium to high price range model segment. It has already received project targets for mainstream autonomous and foreign brands, and will be promoted to more customers.

Investment advice

The company focuses deeply on the intelligent and efficient integration of automobiles, and lays out smart cockpits, intelligent driving, and intelligent connectivity. It is a leading company in the automotive electronics industry. It has scale effects and keeps up with intelligent development. We expect the company to achieve net profit of 1.846/2.042/2.272 billion yuan in 2024-2026, an increase of 19.3%/10.6%/11.2% year-on-year, corresponding to the 2024/2025/2026 P/E of 36.53/33.02/29.68x, respectively. Considering the diversification of the company's customer structure and breakthroughs in overseas markets, coverage for the first time, the company was given an “gain in weight” rating.

Risk warning

Vehicle sales fell short of expectations; mass production of fixed-point models fell short of expectations; profitability fell short of expectations.