\u3000\u3 China Vanke Co.Ltd(000002) 920 Huizhou Desay Sv Automotive Co.Ltd(002920) )
Ping An View:
The company is the leader of China’s automobile cockpit, actively arranging automatic driving and Internet service: the predecessor of the company is “China Europe Electronic Industry Co., Ltd”, and its main business is automobile audio. In 2010, Desai Group acquired foreign equity and established Huizhou Desay Sv Automotive Co.Ltd(002920) , and the company was transformed into a state-owned enterprise. In 2016, the company began to lay out the smart car track and has become one of the leading automotive electronics companies in China. The company focuses on three business segments: intelligent cockpit, intelligent driving and Internet service, and has formed a complete product system on this basis. As an important Tier1 manufacturer in the cockpit field, the company maintains a close relationship with software and hardware suppliers and downstream vehicle manufacturers. In recent years, the intelligent driving track, which is the focus of expansion, has grown rapidly, and the ecological construction business based on Internet service has also maintained stable growth. At the same time, the company is also integrating the three business segments to form more complex and interactive travel solutions, and the synergy is becoming prominent. The company is also complying with the general trend of flattening the automobile supply chain and actively promoting tier0 5. Transformation: the business focus has expanded from the previous hardware integration to the software and hardware design and development, and the cooperation relationship with the car factory has become closer.
The business foundation of intelligent cockpit is laid, and the market demand of integrated products is increased rapidly: the company is a leading enterprise in the subdivision field of intelligent cockpit in China, and it is also one of the few Tier1 capable of mass production of cockpit domain controller in China. The company’s products such as information entertainment system, display module and system are highly competitive in the market. The products cover mainstream automobile enterprises at home and abroad, with stable orders and stable cooperation relations. In line with the acceleration of China’s automobile intellectualization and networking, the company’s integrated cabin products have achieved rapid growth. In 2021, the company’s revenue from intelligent cockpit products reached 7.893 billion yuan, a year-on-year increase of 33.52%. At present, the company’s second-generation cockpit has achieved large-scale mass production, and the third-generation cockpit products have been designated for projects by many mainstream independent brand customers such as Great Wall Motor Company Limited(601633) , gac-e’an, Chery Automobile and ideal automobile. The fourth generation cockpit system based on Qualcomm platform is being developed and pushed forward. Subsequently, with the improvement of the penetration rate of intelligent cockpit, the market space of the industry with a scale of 100 billion is expected to be opened. With the continuous upgrading of the company’s cockpit products, the value of single car is also increasing, and the basic sector will achieve steady growth.
The large-scale acceleration of intelligent driving is becoming the second growth curve of the company: the company began to lay out the field of intelligent driving in 2016. After years of continuous R & D investment, the large-scale acceleration of its intelligent driving products and the iterative implementation of new products and technologies continue to support the rapid development of intelligent driving business. In 2021, the sales of the company’s intelligent driving business increased by nearly 100% year-on-year. Intelligent driving products received new project orders with annual sales of more than 4 billion yuan, and this business has gradually become the company’s new engine. As Tier1, the company has close cooperation with major autopilot chip platforms, and the strategic cooperation with NVIDIA is supporting its rapid growth in autopilot tracks. Relying on NVIDIA’s computing power advantages, the company has developed a full stack solution in the field of automatic driving. Ipu03 and ipu04 are equipped with NVIDIA chip platform. Ipu03 has been mass produced on Xiaopeng P7 and P5, and ipu04 will also be applied to ideal vehicle models in the future. In the future, relying on NVIDIA’s continuous application in the automatic driving track, the company’s rapid growth in the track will continue.
Investment suggestion: the company is China’s leading intelligent cockpit Tier1, with obvious product advantages in information entertainment system and display module. The company has close cooperation with mainstream car manufacturers, with abundant orders on hand, which has also laid a foundation for subsequent growth. At the same time, the company is also making use of its cooperation with NVIDIA in automatic driving to develop ADAS domain controller. China has been cooperating with car manufacturers such as Xiaopeng. The ipu04 under development is also expected to be mass produced in a short time, and there are also plenty of orders on hand. We expect that the company’s EPS from 2022 to 2024 will be 2.07 yuan, 2.78 yuan and 3.65 yuan respectively, and the corresponding PE on April 21 will be 54.7x, 40.8x and 31.0x respectively. We are optimistic about the layout and development prospects of the company in the smart car track, and give a “recommended” rating for the first time.
Risk tips: 1) the market demand is less than expected. The company’s strategic products are mainly used in smart cars. Although the current demand is very strong, it still faces problems such as high macroeconomic pressure, rising automobile costs and lack of core. The final production and sales of smart cars may not be as expected, or it may directly affect the growth of the company’s product demand. 2) Market competition intensifies risks. Although the company has strong competitiveness in cockpit and domain control, due to the hot track, new entrants are also increasing, which may bring challenges to the company’s business. 3) New product expansion may not be as expected. At present, the IPU series products that the company continues to cooperate with NVIDIA mainly lie in the cooperation of Xinli automobile factory. There is still a great room for growth in volume and market influence. In the future, if we can’t obtain new customers or expand the market, there may be a bottleneck in the growth of new business.
