Strategic investment in Tesla authorized after-sales service provider Hiroki Songshan

The company plans to invest 20-30 million yuan to invest in Songshan Hongyi, Tesla's officially authorized after-sales service provider.

It has a number of Tesla authorized sheet spray centers, which are consistent with Tesla's direct service centers in terms of service technology, price system, vehicle parts, etc. This investment will open up Tesla's after-sales business traffic entry for the company's aftermarket layout and develop collaboratively with the established online+offline aftermarket ecosystem.

The company laid out the automotive aftermarket sector in 2013, founded Auto Superman in 2015, and joined hands with Ali and Kangzhong Auto Parts in 2018 to create a “new Kangzhong”, online drain+offline front warehouse, creating a closed loop of traffic.

Holding the core of autonomous driving and joining hands with Didi Xiaoju Auto Suit

Last week, the company signed a strategic cooperation agreement with Xiaoju Auto Service, a subsidiary of Didi. The two sides will jointly develop the application of cutting-edge technologies such as 5G, Internet of Vehicles, and IoT in the field of fleet operation and management and automotive aftermarket.

The company's layout in driverless driving and the Internet of Vehicles has been around for many years. In 2015, it participated in Suzhou Zhihua, holding unique image sensing and intelligent recognition processing technology, and successfully developed a number of intelligent and safe driving systems for automobiles. It was successfully mass-produced and supplied to car manufacturers such as Dongfeng Nissan, GAC, Changan Ford, Great Wall, and BYD. It is one of the few intelligent driving companies that have entered mainstream front-loading automobile manufacturers in China, and has carried out multi-dimensional business cooperation with Hitachi and Huawei, and participated in the vehicle road cloud integration demonstration project supported by the National Development and Reform Commission.

The main steel ring business recovers as the industry recovers, and the world builds factories to mitigate the risk of friction

The recovery of the automotive industry is imminent, and the company's steel ring business is expected to quickly usher in a restorative rebound after the pandemic. With years of accumulation of steel wheel manufacturing processes and technology, the company has become one of the few domestic companies that have entered the OEM market. It is a supplier to major automakers such as SAIC Volkswagen, Brazilian Volkswagen, SAIC GM, SAIC-GM, SAIC-GM, Yutong Bus, Qingnian Automobile, and Jinlong Bus.

At present, the automobile industry's inventory is at the bottom, and it is gradually moving from the active inventory removal stage to the passive inventory removal stage. The industry's recovery trend in 2020 is basically clear, and the wheel business, which is synchronized with the vehicle manufacturing cycle, is expected to usher in a recovery.

Profit forecast: Since the company “Xinkangzhong” has not yet reached the expected profit level, we lowered the company's 19-21 profit forecast from 30/44/540 million yuan to 0.25/15/ 180 million yuan, focusing on the strong layout of the company's aftermarket business and the expectations of the recovery in automobile consumption of the gross margin of the traditional steel ring business, maintaining the “buy” rating.

Risk warning: the risk of fluctuations in raw material prices; the recovery of the car market falls short of expectations; the level of competition in the automotive aftermarket is higher than expected; cooperation with Songshan Hongyi has not met expectations; and the profitability of the aftermarket business has not been boosted.