\u3000\u3000 Luxshare Precision Industry Co.Ltd(002475) (002475)
The layout of automobile business is far-reaching and fully benefits from the transformation of automobile electrification and intelligence
\u3000\u30001. In the past 11 years, the company has entered the automotive field and expanded products and customers through endogenous + extension. Automotive products cover harness, connector, injection molded parts, power supply and automotive electronic products.
\u3000\u30002. From the perspective of existing business flexibility, the company’s existing products cover harness and connector products, which will fully benefit from the market expansion brought by intelligence and electrification + the rise of Shanxi Guoxin Energy Corporation Limited(600617) auto enterprises. It is expected to give priority to supporting China’s supply chain + the company’s forward-looking layout of high-voltage, high-speed and new energy products, which have been introduced into new energy brand customers in North America, new forces of Chinese car making and other new energy auto enterprises.
\u3000\u30003. From the perspective of long-term growth, driven by the deep cooperation of the group’s automobile business (Lisheng layout intelligent cockpit + automatic driving, Lijing innovation has the qualification of vehicle camera module) and the company’s active foreign cooperation (cooperation with Chery to enable vehicle manufacturing and cooperation with Suteng juchuang layout lidar), the company’s automobile business will usher in new opportunities for development and become bigger and stronger. The joint venture Chery + controlling shareholder acquired 20% shares of Chery with 10 billion yuan, developed the vehicle ODM mode, and established a new automobile platform.
\u3000\u30004. We analyze the four logics of Chery, a joint venture of Tencent, which are two attacks and two defences, easy muscle and marrow washing, and the origin of qualitative change: 1) attack one, ODM, which helps n companies build cars, is expected to cooperate with technology enterprises in the automotive field such as Huawei and Xiaomi, with a large volume at the end of 23; 2) Attack 2. If Apple builds cars in China, the company can improve its competitiveness by arranging and polishing its strength in advance through auto parts + ODM; 3) Keep 1. Having a car manufacturing outlet to the sea will accelerate the expansion of Tier1 business, even if 1) and 2) fail, which is a great enhancement to the existing automobile business; 4) Shou 2. According to the company’s investor relations record form, the controlling shareholders’ meeting is willing to transfer Chery’s equity to the listed company on the principle of maximizing the interests of the listed company and on the premise of being helpful to the company. The controlling shareholders purchase 20% of Chery’s equity with a corresponding Chery valuation of 50 billion yuan. If Chery has a premium after listing, the market value of this part may be given to the listed company.
The company has a layout of parts + complete machines in AR and VR fields, which is expected to benefit from Apple’s Mr equipment leading a new round of consumer electronics innovation cycle in 22 years. Apple’s first generation MR device is expected to be launched in 22q4, which is expected to redefine AR / VR products and lead the VR / AR experience to a new level. The company’s layout in AR and VR fields, with parts + complete machines, is expected to benefit from the accelerated growth driven by the 22-year AR / VR consumer electronics innovation cycle.
The expansion of key customer categories + the increase of share support the growth of the company’s traditional consumer electronics business. 1. Spare parts: acquire Nikai computer, improve the layout of structural parts, and fully infiltrate the layout of mechanical, optical, acoustic and electrical integration; 2. SIP: increase the gross profit margin of assembly; 3. Optics: Lijing innovated to acquire Gaowei electronics and cut into the front camera module (in vitro), so as to further enhance the optical strength of Guangbao; 4. Assembly: acquire Wistron, start iPhone assembly (in vitro), undertake the share of Taiwan manufacturers, and increase the share of Apple watch assembly.
Investment suggestion: it is estimated that the company’s revenue in 2022 / 2023 will be 150.6/188.7 billion yuan, yoy + 25.46% / 25.35%, and the net profit will be 11.64/14.52 billion yuan, yoy + 37.73% / 24.81%. Give the company 40 times PE for 22 years, the corresponding target price is 66 yuan / share, and maintain the “buy” rating.
Risk tips: the development of automobile electrification and intelligence is less than expected, domestic supporting facilities are less than expected, apple ar new product release is less than expected, the increase of company share is less than expected, market competition is intensified, Sino US trade friction, cross market selection of comparable company valuation, consumer electronics sales and ASP are less than expected
