Company news

The company's recent situation

On December 18, 2024, Xiangshan Co., Ltd. issued an announcement announcing that Junsheng Electronics has become its controlling shareholder by increasing its stock holdings. The new controlling shareholder has continued to increase its holdings and control of Xiangshan shares since July 2023. We believe that Xiangshan shares are expected to strengthen strategic synergy in the auto parts business and accelerate the overall strategic layout in the fields of the new energy vehicle industry chain and smart cockpit.

reviews

The controlling shareholder becomes Auto Zero's counterpart, and the Group's business collaboration is expected to strengthen. Since July 2023, Joyson Electronics has intensively increased its shares in Xiangshan through various means. As of December 18, 2024, it already held 24.2% of its shares and became the largest shareholder. A shareholders' meeting was held on the same day to officially obtain control of Xiangshan shares. Xiangshan announced on the same day that the controlling shareholder plans to continue to increase its holdings in the future, with an increase of between 0.15 billion and 0.25 billion yuan in shares. The company believes that this move reflects the controlling shareholders' recognition of the long-term investment value of Xiangshan shares and their confidence in future development prospects. We believe that this change in control will help Xiangshan Co., Ltd. integrate the Group's resources, rely on the controlling shareholder's production, research and marketing resources, expand market share and product matrices, improve management efficiency, and achieve high-quality development.

The company is actively transforming its customer structure, and its cockpit products support domestic luxury car brands. The company's smart cockpit components include smart accessories and air management systems. Customers cover mainstream OEMs, new car builders and emerging luxury brands at home and abroad. The company introduced high-end wood trim with integrated optoelectronic technology, which can effectively enhance the vehicle's luxurious atmosphere and an electric air outlet system based on self-developed motors, further consolidating the company's leading domestic penetration rate for such products. We believe that the company is actively transforming its customer structure, evolving from a BBA-based customer structure to a structure with more domestic and foreign NEV companies, and the company is expected to empower high-end domestic brands such as JAC, Cyrus, NIO, Xiaopeng, Ideal, ZEEKR, etc. through overseas luxury vehicle cockpit support experience.

Relying on our strengths, we develop charging and distribution systems for flying cars. The company has obtained designated production rights for the Xiaopeng Huitian Flying Vehicle Project to provide an all-in-one charging and distribution management system for its land vehicles and aircraft. It is expected to enter mass production in 2025. We believe that the all-in-one charging and distribution design can effectively reduce the weight of aircraft to obtain better economy; at the same time, this cooperation pioneered the strategic layout of Xiangshan Co., Ltd. in the field of low-altitude economy. The company is expected to continue to broaden its business scope and gradually develop strong product definition and mass production capabilities as the industry develops, thereby contributing to steady performance.

Profit forecasting and valuation

The profit forecast for 2024/2025 remains unchanged. The current stock price corresponds to 2024/2025 25.5/20.9 times the price-earnings ratio. Considering the improvement of the sector's overall valuation system, we have maintained an industry rating and raised our target price by 10% to 40.7 yuan, which corresponds to a price-earnings ratio of 31/25 times 2024/2025, and has 20% room to rise compared to the current stock price.

risks

Geopolitical risks, the risk of rising raw material prices, and the penetration of high-end models falls short of expectations.