Yunyi Electric is a high-tech enterprise dedicated to R&D, manufacturing and sales of automotive electronics. The company has now formed a good trend where multiple business segments such as vehicle controllers and components, smart wiper system products, sensor products, new energy connection component products, and semiconductor power device products go hand in hand. In the field of intelligent power controller product segmentation, the company has an outstanding position as a leader in the industry, and has ranked first in the industry in comprehensive product sales for many years. At the same time, the company lays out various businesses for collaborative development. The company's revenue and net profit are growing steadily, and its profitability performance is excellent. The first coverage gave an “increase in wealth” investment rating.

Intelligent controller products maintain industry leadership and excellent customer resources. The company's intelligent power controller products mainly include automotive rectifiers and regulators. In the field of intelligent power controller product segmentation, the company's leading position in the industry stands out. The overall sales volume of products has ranked first in the industry for many years in a row. In the OEM market, the company continues to supply automobile manufacturers, vehicle power intelligent control assembly manufacturers, and first-class supporting vehicle manufacturers, including Changan Ford, SAIC-GM, Changan Automobile, SAIC Passenger Vehicle, GAC Group, BAIC Group, Dongfeng Nissan, Great Wall Motor, Geely Automobile, JAC, Chery, Jiangling Motors, Changan Suzuki, etc., and has entered the global supply system of Mercedes-Benz, BMW, and Audi.

The smart wiper system has entered the release period, and the nitrogen and oxygen sensor has mastered the core technology. The main products of smart wiper systems include bone wipers, boneless wipers, wiper systems and related control units, driving devices, etc. We have now mastered independent development of rubber material formulations for rubber strips, boneless algorithm design, and NVH design and diagnosis technology.

Currently, all core rubber strips are independently developed and produced. It is the only wiper tape in China that has passed mainframe certification and is loaded in batches, with an annual supply of more than 15 million. Nitrogen and oxygen sensors have now mastered core chip development and control system algorithms. As of November 2022, Yunyi's nitrogen and oxygen sensors have covered 99% of the world's models. Relying on 22 years of OE supporting R&D experience and 200,000 actual vehicle verification, they have passed the verification of 2 domestic OEMs and 1 foreign OEM, and have achieved mass production in the OE market. Precision injection molding products continuously improve the precision level and production efficiency of injection-molded inserts, while focusing on core technical capabilities to expand the industrial layout of new products such as charging guns and high-voltage connectors.

The company has high growth and high profit growth. In 2019-2023, the company's revenue grew from 0.71 billion yuan to 1.67 billion yuan, with a compound growth rate of 23.7%; in the first three quarters of 2024, the company achieved revenue of 1.56 billion yuan, an increase of 31.8% over the previous year. In 2019-2023, the company's net profit after deduction increased from 0.07 billion yuan to 0.26 billion yuan, with a compound growth rate of 38.6%; in the first three quarters of 2024, net profit without return to mother was 0.28 billion yuan, an increase of 64.5% over the previous year. In addition, the company's expense ratio continued to decline in the 2019-2023 period, from 20.3% to 11.0%, and the company's expense ratio for the first three quarters of 2024 was 10.1%, further improving the level of cost control.

The first coverage gave an “increase in wealth” investment rating. Actively adapting to the development trend of automobile electrification and intelligence, Yunyi Electric has formed a good trend where multiple business segments such as intelligent automotive controllers, smart wiper system products, sensor products, new energy connection component products, and semiconductor power device products go hand in hand. The estimated net profit for 24-26 was 0.42/0.55/0.69 billion yuan, respectively.

Risk warning: macroeconomic fluctuation risk; product quality risk; new product development risk; raw material price fluctuation risk; international trade environment change risk.