Based on comprehensive automotive diagnostic products, Daotong Technology continues to launch new diagnostic and testing products such as TPMS (Tire Pressure Testing System), ADAS (Advanced Driver Assistance System), and software cloud services in line with the development trend of automotive intelligence, connectivity, and new energy; it has now developed into one of the leading companies in the field of intelligent comprehensive diagnosis and testing in the global automotive aftermarket. The company grasped the development opportunities brought by the new energy trend and launched new energy charging pile products in 2022; the overseas charging pile business is expected to open up the company's second growth curve and achieve significant profit growth.

First growth curve: leading automotive comprehensive diagnostic solutions, broad market space? Basic overview: Comprehensive diagnostic products continue to be iterated and highly compatible. The company continues to expand its product matrix around the “new three modernizations” of automobiles to provide customers with highly integrated and highly compatible automotive comprehensive diagnostic and testing solutions.

1) Stable basic disk: The company's comprehensive automotive diagnostic products are iteratively innovative, with excellent performance and strong compatibility.

① Continuous product iteration: The company has launched a new generation of comprehensive diagnostic products, with increased depth of functionality and wide coverage (suitable for small or large maintenance agencies, passenger cars or commercial vehicle markets).

② Core competitiveness: Five core systems composed of automotive diagnostic communication, automotive-specific operating systems, intelligent simulation analysis systems, comprehensive diagnostic expert systems, and cloud platform maintenance information systems establish the competitiveness of comprehensive diagnostic products.

③ Excellent product performance: Comprehensive diagnostic products have high diagnostic accuracy and are intelligent and convenient to operate.

④ Strong product compatibility: As a general diagnostic analysis tool, comprehensive diagnostic products cover DIFM and DIY post-maintenance markets, and have strong compatibility and price advantages.

2) Intelligent: The company relies on core components such as automotive sensors to lay out an intelligent product line. ① TPMS aspect: The company's TPMS products have high model coverage and are upgraded more frequently. As global TPMS regulations are introduced one after another, the TPMS market size is expected to continue to grow. ② ADAS aspect: The company's ADAS product calibration methods are comprehensive, highly automated, and efficient. Its excellent model compatibility is expected to help the company open up profit boundaries.

3) Networking: Create diagnostic products as intelligent centers for maintenance scenarios.

① The company is committed to realizing the vision of “automotive intelligent diagnostic products gradually becoming intelligent hubs in future maintenance scenarios” through “end+cloud+big data+AI” digital comprehensive diagnosis and maintenance solutions, thereby greatly improving diagnosis and maintenance efficiency. ② Remote experts: Users can quickly match online experts to efficiently solve diagnostic programming problems. ③ Maintenance database: The company has a large library of actual test cases to help maintenance technicians make maintenance predictions and customize accurate plans.

④ Digital stores: Achieve OTA upgrades and multiple services; software upgrade revenue increases year by year, gross margin remains above 93%; charging model is mature.

4) Renewable energy: Build a new energy diagnostic business ecosystem and open up growth points for the diagnosis business. The company's new energy diagnostic business ecosystem has been gradually improved, and many products such as diagnostic instruments and balancers have helped complete the closed loop of NEV battery maintenance.

Current state of the industry: The automotive diagnostic industry has high barriers, and the company is already one of the leaders 1) Industry characteristics: ① The automotive diagnostic market is showing significant trends of intelligence, connectivity, and new energy. ② The industry has high technical barriers and intellectual property barriers.

2) Competitive pattern: The global automotive diagnostic market shows an oligopolistic competitive pattern. Currently, the main participants are large companies such as Shinaibao and Bosch, as well as later entrants such as Daotong Technology and Yuanzheng Technology. The company has now developed into one of the leading enterprises in the field of intelligent comprehensive diagnosis and testing in the global automotive aftermarket.

3) Company characteristics: ① Compared with international giants, there is a certain gap in Daotong's production scale, but its revenue growth rate and gross margin are significantly higher; the company's products have high hardware configuration, wide software model coverage, fast update frequency, and are extremely cost-effective.

② Compared with comparable domestic companies, Daotong Auto's diagnostic business has a larger revenue scale and significant channel advantages.

4) Market space: According to Verified Market Research data, the global automotive diagnostic analysis tool market is expected to reach $129.88 billion in 2031.

Second growth curve: The overseas charging pile market is full of stars. The company has been operating overseas for many years and is expected to become a leader in offshore pile companies

Overview of the overseas charging pile market: There is a lot of room for demand, and charging piles going overseas is an inevitable trend 1) Drivers of demand for overseas charging piles: the growth rate of charging pile construction in Europe and the US is not as fast as the growth rate of new energy vehicles; compared to China, Europe and the US have low charging pile ownership, high pile ratio, and large demand gap; subsidy policies continue to advance.

2) Overseas charging pile industry trends: Overseas demand is flexible and is expected to usher in a phase of rapid deployment. According to data disclosed by the IEA in 2024, the number of global public charging stations will exceed 15 million in 2030.

Tritium, the originator of charging piles, went bankrupt, and the company avoided corresponding risks and is expected to take a seat 1) Tritium went bankrupt due to poor operation and profitability.

2) Daotong has remarkable operational capabilities (integration of mobile clouds, core technology support, offline store promotion, global layout) and excellent profitability (gross margin/gross margin of charging piles remains above 50%/32% all year round); in the context of a positive industry, it is expected to occupy a place in the European and American markets.

Overseas charging pile market pattern: The US head effect is obvious, and the European market is scattered 1) The leading effect of the US market is obvious (ChargePoint and Tesla occupy a large share of the AC and DC charging pile markets respectively), and different pile companies have different operating models.

2) The distribution of charging stations in the European market is highly uneven, and participants are scattered. Service providers are mainly traditional energy companies and car companies.

Prospects for the company's charging piles to go overseas: It is gradually comparable to leading overseas pile companies, and is expected to become the leader of domestic piles 1) Compared with overseas pile companies, the technology and channels accumulated by the company's automobile diagnosis business will help increase the market share of its charging pile products in the overseas market and gradually rival overseas pile companies.

2) Compared with domestic offshore pile companies, the company has strong scale strength and excellent profitability; the overseas layout is relatively early and the first-mover advantage is remarkable; the channel resources are strong, and its influence continues to expand; the company is expected to become a leader in domestic offshore pile companies.

First coverage, giving an “incremental” rating: According to the business split and profit forecasting model, we expect the company's net profit to be 0.55/0.652/0.83 billion yuan in 2024-2026, respectively. According to the latest stock price, the corresponding PE is 19.4/16.4/12.9 times, respectively. Under the premise that the company's first growth curve is growing steadily, we are optimistic about the future layout of its second growth curve overseas and the performance it may release, and give it an “increase” rating.

Risk warning: risk of developing new products and technologies falling short of expectations; risk of production capacity release falling short of expectations; risk of large price fluctuations in the industrial chain; risk of untimely updating of information used in research reports; risk of deviations in industry size estimates, etc.