\u3000\u3000 Bethel Automotive Safety Systems Co.Ltd(603596) (603596)
Event overview
The company announced: 1) based on the consideration of the company’s operation and management and long-term development strategy, Mr. Yuan Yongbin, chairman and general manager, proposed to resign from the post of general manager of the company to the board of directors of the company, and will continue to serve as the chairman of the company and relevant special committees of the board of directors, and appoint Mr. Yan Shifu as the general manager of the company at the same time; 2) The number of shares to be repurchased by the company shall not be less than 300000 shares (inclusive) and not more than 500000 shares (inclusive) for the implementation of equity incentive or employee stock ownership plan; 3) The board of directors of the company decided not to exercise the early redemption right of “Bert convertible bonds” and not to redeem “Bert convertible bonds” in advance. In the next six months (i.e. from January 26, 2022 to July 25, 2022), if the “Bert convertible bonds” trigger the redemption terms, the company will not exercise the early redemption right.
Analysis and judgment:
The introduction of former Bosch executives and strong alliance to accelerate the rise
The company will appoint Mr. Yan Shifu as the general manager of the company. Mr. Yan Shifu previously worked in Trina Solar and Bosch, and served as the vice president of Suzhou Bosch from 2013 to 2021, responsible for sales and project management. We believe that Mr. Yan Shifu’s joining will greatly enhance the company’s sales capacity and accelerate the expansion of electronic control business. Mr. Yuan Yongbin resigned as the general manager and continued to serve as the chairman. We expect that Mr. Yuan Yongbin, as a senior expert in the industry, will lead the company’s strategy and technology development with clear division of labor and show his strengths. We believe that he will lead the company’s development to a higher level and rise to become the leader of wire controlled chassis in the reform of electric intelligence.
Share repurchases are used to encourage core talents with deep binding
The company plans to repurchase no less than 300000 shares (inclusive) and no more than 500000 shares (inclusive) for the implementation of equity incentive or employee stock ownership plan, which has been deliberated and approved by the board of directors of the company and will be completed within 6 months from now, and the repurchase price shall not exceed 108.89 yuan / share. The development of the company’s high-tech value-added products such as line control is accelerating, and there is an urgent need for relevant talents. After the release of the first phase of the employee stock ownership plan in June 2021, it is proposed to promote incentives, which will help the company attract and stabilize excellent talents, fully mobilize the enthusiasm of core backbone and employees, improve business efficiency, and be conducive to the medium and long-term development of the company.
The rise of intelligent electric brake replaced by domestic brake by wire
EHB was successfully mass produced, and domestic substitution accelerated the breakthrough. Brake by wire EHB will replace the body stability system ESP and become the mainstream product of intelligent driving executive layer, and the penetration rate is expected to accelerate. Based on ESP mass production experience, the company has developed one box product wcbs (integrated line control system), which is superior to the current mainstream two box products in performance. At present, it has been mass produced, with a phase I capacity of 300000 sets, becoming the first mass production manufacturer in China. The company started from the new energy vehicle market, gradually penetrated into fuel vehicles, and accelerated the breakthrough of domestic substitution.
Electronic control products have strong expansibility, and intelligent electric products are rising. The new electric tailgate opening and closing system integrates dual control EPB, which has cost advantages and large growth space. It is expected that the company will develop more products related to body control and improve system integration with the mature development ability of automobile electronic control system ECU and vehicle motor control technology. At the same time, the company is currently developing ADAS technology based on forward-looking camera system and forward-looking millimeter wave radar. In the medium and long term, the company is expected to become an ADAS system integration supplier and open a new growth channel for the company.
Investment advice
The company’s customers and product structure are upgraded. In the short term, it benefits from the lightweight and large-scale volume and the improvement of EPB penetration. The medium and long-term wire controlled braking and ADAS system are expected to contribute significant increment. Maintain profit forecast: it is estimated that the company’s revenue from 21 to 23 years will be RMB 3.53/49.7/6.12 billion, the net profit attributable to the parent company will be RMB 5.5/7.7/990 million, and eps1.5% 34 / 1.89/2.43 yuan, corresponding to the closing price of 73.96 yuan / share on January 25, 2022, and PE is 55 / 39 / 30 times respectively. Considering the company’s future growth and breakthroughs in new businesses such as line control, the company was given a 40 times PE valuation in 2023, and the target price was raised from 75.60 yuan to 97.20 yuan, maintaining the company’s “buy” rating.
Risk tips
Rising prices of raw materials; Customer expansion is less than expected; Lack of core leads to lower than expected output of the industry.
