\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 799 Changzhou Xingyu Automotive Lighting Systems Co.Ltd(601799) )
Matters:
Announcement of the company: on March 15, 2022, Changzhou Xingyu Automotive Lighting Systems Co.Ltd(601799) announced that the company will undertake new project orders of about 13.5 billion yuan in 2021, including ADB headlamp, DLP headlamp and lamp controller; From January 1, 2022 to the date of this announcement, the company undertook new project orders of about 4 billion yuan. According to the R & D cycle of the lamp industry, the project starts to contribute revenue and profits after 18-24 months. At present, the operation of the company is normal and all work is carried out in an orderly manner.
Guoxin automobile view: Guoxin automobile deeply tracks the lamp industry and firmly believes that the lamp value has the three characteristics of “high starting point, high elasticity and long duration”, and the penetration of short-term led, long-term intelligent lamp (ADB, DLP) and laser headlamp is a high-quality track for parts segmentation. Under the background of intelligence and electrification in the future, the lamp, as a visual part, is expected to become the core carrier of the vehicle data flow output, and realize the functional upgrading from “lighting” to “expression”. In the short term, the company undertook about 13.5 billion yuan of new project orders in 2021 and about 4 billion yuan of new project orders from January 1 to March 15, 2022. According to the R & D cycle of the lamp industry, the project began to contribute revenue and profits after 18-24 months (most of the orders obtained in 2021 are expected to enter large-scale mass production in 2023), which is expected to increase the company’s performance. In the medium and long-term dimension, the trend of ADB and projection headlamp industry at the industry side is verified. The company side actively embraces forward-looking new technologies and front-end new customers. The industrial chain cooperates to expand the capacity circle. Overseas construction is progressing steadily and the long-term logic is smooth. The short-term lack of core does not change the industry demand, and the company has the potential of global lamp leader for a long time. Considering that the lack of core in the industry has led to a significant decline in the output of the company’s core customers, such as FAW Volkswagen, we maintain the previous profit forecast. We expect the net profit of RMB 1.09/15.7/2.19 billion in 21 / 22 / 23, corresponding to PE 35 / 24 / 17x respectively, maintain the one-year target valuation range of RMB 198238, and the short-term lack of core does not change the industry demand. The company has the potential of global lamp leader for a long time and maintains the buy rating.
Comments:
Customer dimension, Changzhou Xingyu Automotive Lighting Systems Co.Ltd(601799) constantly reaping new orders and thickening the company’s performance
In 2021, Changzhou Xingyu Automotive Lighting Systems Co.Ltd(601799) undertook new project orders of about 13.5 billion yuan, including ADB headlamp, DLP headlamp and lamp controller; From January 1 to March 15, 2022, the company undertook new project orders of about 4 billion yuan. According to the R & D cycle of the lamp industry, the project starts to contribute revenue and profits after 18-24 months. At present, the operation of the company is normal and all work is carried out in an orderly manner. We believe that the company relies on its own product competitiveness to continuously obtain new orders, which provides a strong guarantee for the future development of the company.
In terms of product dimension, in the era of automotive electric intelligence, the lamp continues to upgrade, and the company is looking forward to the layout of new lamp products
With the background of intelligence, the lights are the high-quality track of parts segmentation. Since Guoxin automobile team deeply tracked and studied the lamp Market (in-depth investigation of lamp industry chain, lamp disassembly experiment, visit of engineers of lamp enterprises and vehicle manufacturers, investigation of international lamp exhibition, etc.), it has been greatly recognized by customers. As a subdivided automobile part, lamp can surpass the growth of the whole automobile industry, The main reason behind this is the increase in the value of lamps brought about by technological upgrading (high starting point, high elasticity and long duration), and the fundamental reason is that consumers are willing to pay higher costs for lamps (beautiful, intelligent and energy-saving) under the trend of automobile electronization and intellectualization. Under the background of intelligent electrification in the future, As a visual part, the lamp is expected to become the core carrier of the vehicle data flow output, and realize the functional upgrading from “lighting” to “expression”.
With the continuous evolution of technology trend, the lamp configuration of new forces of car manufacturing emphasizes science and technology and intelligence. Weilai, Xiaopeng and ideal are equipped with LED as standard. Weilai uses through heartbeat tail lamp, Xiaopeng uses integrated diamond matrix tail lamp and ideal star ring all LED tail lamp. In addition, Weilai is also equipped with intelligent 10 color atmosphere lamp / light waterfall atmosphere lamp, highlighting fashion and intelligence. Zhiji automobile is equipped with 2.6 million pixel DLP projection headlights and ISC pixel signal lights equipped with more than 5000 LEDs to realize v2x intelligent driving integration interaction and intelligent lighting expression. In 2020, the forward-looking matrix LED headlights have been applied in some models with a price of 1 China Vanke Co.Ltd(000002) 00000, such as Haval H6 and Roewe rx5. The subsequent ADB, DLP, laser headlights and OLED lamps undertake LED lamps, and the market is expected to continue to expand.
1) function based – ADB lamp
Adaptive driving beam is an intelligent high beam system, whose main function is to improve the safety of meeting at night. Traditional car headlights are dazzling, which is easy to dazzle drivers in the lane at night, laying hidden dangers for driving safety. In contrast, ADB technology judges the position and distance of incoming vehicles in front through the input of video camera signal, and adjusts the light irradiation area accordingly to avoid glare on incoming vehicles, and meet the vision needs of drivers to the greatest extent. ADB intelligent headlights can improve the night image recognition ability of ADAS system, which will become the technical trend of vehicle safety lighting, At present, it is already a part of ADAS system and is expected to become the standard product of intelligent driving vehicles in the future.
2) based on Intelligent – DLP lamp
The full name of DLP is “digital light processing”, that is, digital light processing, that is, the technology needs to digitally process the image signal first, and then project the light. It is based on the digital micromirror device (DMD) opened by Ti (Texas Instruments) to complete the visual digital information display technology. The imaging principle of DLP is that the LED light source draws the picture image through the optical elements such as dichroic mirror, light collecting mirror and lens group, and then draws the picture image through the control reflection of DMD chip, which is reflected to the lens to display the image. DMD chip has millions of micro lenses gathered on CMOS silicon substrate. Each micro lens is installed on a precision micro hinge. The micro hinge can be driven by the digital signal of SRAM (static random access memory) to adjust the direction and angle of the lens to reflect light to the screen to form a projection image. By controlling the angles of millions of micro mirrors in the surface micro mirror matrix, the reflection angle of light can be changed, so that a dark area can be formed in the specified area, and the transmission angle of light and the size of dark area can be accurately controlled, so as to effectively avoid dazzle. At the same time, it can maintain the most light on the road, ensure the maximum utilization of night light, and effectively improve the driving safety at night.
The advantages of DLP lamp are: 1) high pixel and high resolution: ADB single lens pixels are between 110000, and DLP single lens pixels exceed one million. DLP is a more accurate ADB with extremely high resolution; 2) Accurate indication: DLP lens module can enable the driver to turn on the high beam under various road conditions without affecting the sight of other drivers, and provide accurate indication lighting; 3) Anti dazzle: provide a dark area of light to prevent strong light from affecting the driver and pedestrian of the incoming vehicle or the vehicle in front; 4) Programmable and intelligent interaction: DLP technology can provide personalized customization of vehicles, such as light show, which can project various prompt patterns on the road according to the environmental information captured by various sensors.
At present, the unit price of DLP headlights is about 10000 yuan / piece. According to the foreign product price of more than 5000 yuan, if China is put into production in the next 2-3 years and solves the problem of DLP light source technology, the price has a lot of room for downward.
Changzhou Xingyu Automotive Lighting Systems Co.Ltd(601799) as China’s leading lamp enterprise, strengthen the development and application of new lamp technology. In 2020, Xingyu’s headlamp ADB projector module will be applied; Application of OLED technology in rear combination lamp; Mass production of the second generation of Volkswagen voice interactive cool atmosphere lamp and laser assisted high beam lamp; Gesture recognition indoor lights and pixel headlights modules have been successfully developed. In the first half of 2021, Xingyu successfully developed two types of pixel headlamps, one is the imaging intelligent headlamp with DMD as the core optical device, and the other is the imaging intelligent headlamp with microled as the light source. The headlamp has simpler structure and higher optical efficiency, and successfully solved many technical problems such as imaging optics, electronic drive, heat management and so on. In addition, in order to enhance Xingyu’s scientific and technological innovation and R & D capacity, the company established Xingyu Shanghai R & D center in Shanghai.
Strategic cooperation with Huawei and give play to the synergy advantages of the industrial chain. On February 16, Changzhou Xingyu Automotive Lighting Systems Co.Ltd(601799) and Huawei Technology Co., Ltd. held the signing ceremony of the letter of intent for cooperation in intelligent vehicle optical business of Huawei optical product line in Dongguan, China. Mr. Jin Yuzhi, President of Huawei optical product line, Mr. Huang Zhiyong, President of optical application field, Mr. Changjiang Liqi, Sales Department of intelligent vehicle solutions, Mr. Zhou Xiaoping, chairman and deputy general manager Li Shujun and deputy general manager Li Gang attended the signing ceremony. Mr. Liu Shengjun, general manager of intelligent lamps in the field of optical applications of Huawei, and Mr. Lin Shudong, deputy general manager of Xingyu, signed a letter of intent on cooperation on behalf of both parties. According to the agreement, the two sides will give full play to their respective advantages, mutual benefit and win-win results, carry out strategic cooperation in the field of intelligent lamps with the goal of serving global customers, and jointly build a close strategic partnership for sustainable development. The two sides will jointly build the end-to-end capability of intelligent lamps from design to manufacturing and delivery, lead the development of intelligent lamp industry, and form a continuously leading competitiveness of intelligent lamp system solutions in the industry. In addition, the two sides will comprehensively carry out other business cooperation in the field of intelligent vehicle light. We believe that DLP projection headlights and ADB headlights have successively entered the market, which is both an opportunity and a challenge for traditional lamp enterprises. Industrial chain coordination is particularly important in the new technological transformation of the lamp industry. Xingyu cooperates with upstream chip, software algorithm and other enterprises based on their traditional structural design, optical and electronic design advantages, It is expected to continue to take the lead in the research and development of forward-looking products and increase the gap with other independent lamp brands in China.
It is suggested that the company has long-term potential to buy new orders and maintain its global investment
Investment suggestion: in the short-term dimension, the company will undertake about 13.5 billion yuan of new project orders in 2021 and about 4 billion yuan of new project orders from January 1 to March 15, 2022. According to the R & D cycle of the lamp industry, the project will start to contribute revenue and profits after 18-24 months (most of the orders obtained in 2021 are expected to enter large-scale mass production in 2023), which is expected to increase the company’s performance. In the medium and long-term dimension, the trend of ADB and projection headlamp industry at the industry side is verified. The company side actively embraces forward-looking new technologies and front-end new customers. The industrial chain cooperates to expand the capacity circle. Overseas construction is progressing steadily and the long-term logic is smooth. The short-term lack of core does not change the industry demand, and the company has the potential of global lamp leader for a long time. Considering that the lack of core in the industry has led to a significant decline in the output of the company’s core customers, such as FAW Volkswagen, we maintain the previous profit forecast. We expect the net profit of RMB 1.09/15.7/2.19 billion in 21 / 22 / 23, corresponding to PE 35 / 24 / 17x respectively. We update the one-year target valuation range of RMB 198238. The short-term lack of core does not change the industry demand. The company has long-term potential as a global leader in lamps and maintains the buy rating.
Valuation of comparable companies: we select Zhejiang Dingli Machinery Co.Ltd(603338) , the core target of the lamp industry chain Keboda Technology Co.Ltd(603786) , and the leading enterprise of shock absorption and sound insulation Ningbo Tuopu Group Co.Ltd(601689) for valuation of comparable companies (the market value of comparable companies is close). The average PE of the three comparable companies in 2023 is about 21 times. Maintain the one-year target valuation of Xingyu (corresponding to 2023) at 198238 yuan (corresponding to 25-30 times of pe3 in 2023). The current share price (137.50 yuan) still has about 44% – 73% room for improvement from the target valuation, and maintain the buy rating.
Risk tips
Risk of core shortage in the industry; The prosperity of China’s auto market continues to face downward risks; Annual decline and raw material price fluctuation risk.
