(Report Producer/Author: Everbright Securities, Ni Yujing)
1. Combing the auto parts sector
Since 2020, the CITIC Auto Parts II Index has risen by about 47.5%; of which 2021/10 has risen by about 11.3%. Current index TTM PE valuation of about 50.9x(vs. The average valuation to date in 2020 is about 49.6x).
We judge that 1) the rise in the auto parts sector is mainly due to the improvement of the 4Q21 chip shortage driven by the improvement of the industry replenishment, as well as the increase in the penetration rate of new energy passenger cars; 2) intelligent electrification (especially Tesla / new forces) The investment in new technologies and processes, as well as changes in the supply chain pattern are expected to drive the valuation center of the sector up (2020 Tesla domestic so far index TTM PE valuation average of about 49.6x vs. 2018-2019 about 22.3x); 3) In view of the fact that Tesla is different from the traditional OEM supplier selection strategy, it is expected that there may be higher growth prospects for its own brand spare parts suppliers; 4) it is optimistic about the investment opportunities of its own brand spare parts suppliers with strong new technology and process research and development, as well as advantages in capacity climbing, supply assurance, quality and cost.
1.1, 4Q21 Inventory replenishment drives valuation repair
Affected by the chip shortage in the first three quarters of 2021, the automotive industry showed a passive de-library state; benefiting from the gradual alleviation of the chip shortage opened in 2021/9-10, the inventory of 4Q21 manufacturers increased and the trend of replenishment was gradually opened. In 2021/12, domestic car/passenger car manufacturers' inventories were +16.7%/+27.0% to 845,000 units/550,000 units, and we calculated that the inventory depth of passenger car manufacturers/passenger car total inventory depth was +15.0%/+6.5% to 0.23x/1.69x.
We judge that 1) 2021/9 passenger car manufacturers inventory has increased slightly, but large-scale power curtailment and National Day holidays and other factors have led to a decline in 2021/10 passenger car manufacturers inventory; 2) with the gradual easing of chip supply, 4Q21 passenger car manufacturers and channel inventories have increased, and the industry has gradually switched from passive destocking to active replenishment.
1.2, valuation has been repaired, focus on the logic of growth
We expect that the current trend of the auto parts sector has relatively fully reflected the trend of replenishment, performance cashability/sustainability, and the growth of intelligent electrification or has become the main line of logic. In 2021, the penetration rate of domestic new energy passenger cars/vehicles will rise rapidly to 15.5%/13.4% (vs. About 6.0%/5.3% in 2020; among them, the penetration rate of new energy passenger cars/vehicles in 2021/12 is as high as 20.6%/19.1%. From the perspective of sales structure, Tesla and the new forces (NIO/Ideal/Xiaopeng) will sell a total of 592,000 units in 2021 (the domestic new energy passenger car market share is about 18% vs. about 20% in 2020).
We judge that 1) the promotion path of intelligent electrification of automobiles is clear, and the fixed-point release of relevant auto parts corresponding to the increase in the penetration rate of downstream new energy vehicles shows a deterministic trend. 2) At present, Tesla leads the global intelligent electrification, the new forces are in the stage of brand positioning / model pricing scope expansion, and traditional car companies are still in the early stage of the establishment of smart electric vehicle sub-brands; it is expected that the new technology and process of intelligent electrification led by Tesla will set a new benchmark in the industry, superimposed Tesla is different from the traditional OEMs Of spare parts supplier selection strategy, optimistic about its related industrial chain with core process research and development, capacity climbing, and independent spare parts growth prospects with supply and cost advantages.
2. Intelligent cockpit
The intelligent cockpit is mainly based on the in-car entertainment system, which will be upgraded from mechanized switching to electronic, intelligent, and highly intelligent. Driven by the strong support of the policy side, the enhanced demand of consumers based on the experience upgrade of intelligent electric vehicles and machine systems, and the promotion of higher fulfillment at the technical level, the smart cockpit has shown a trend of accelerated landing.
We judge that compared with the high upstream technical barriers of the intelligent cockpit industry chain and the increasing competition trend corresponding to the entry of downstream consumer electronics, the midstream hardware market is more certain, and it is expected that the size of the 2025E smart cockpit hardware market will reach RMB 110 billion + billion (2021-2025E Cagr up to 22%); among them, the central control screen, HUD, cockpit domain controller, and sky curtain/skylight glass are expected to be the most noteworthy subdivision hardware.
2.1, intelligent cockpit three driving forces
The smart cockpit presents the characteristics of stock update, incremental penetration, and continuous upgrading of functional components; we expect that its core driving force mainly comes from policy support, user demand enhancement, and strong technical fulfillment.
1) Policy guidance: The 2021/3 "14th Five-Year Plan" proposes to aim at frontier areas such as integrated circuits, concentrate resources on key components and components and other core technologies, and vigorously promote the development of automotive intelligence.
2) Enhanced user experience demand: In 2021, the smart cockpit will become the third most important consideration for users to buy a car (only after active safety/passive safety). According to J.D.Power, nearly 80% of consumers recognize the value of the cockpit configuration and are expected to convert demand; according to IHS, about 46% of consumers are willing to pay for smart cockpits at reasonable prices.
3) Strong technical fulfillment: Compared with automatic assisted driving, the vehicle-level safety standards of the intelligent cockpit are lower; among them, the central control screen and the instrument panel only need to pass the QM/ASIL A and ASIL B standards respectively (vs. automatic assisted driving related parts such as cameras/radars need to pass the higher safety level ASIL C/D standard).
2.2. Spin-off of the intelligent cockpit industry chain
We will split the intelligent cockpit industry chain into upstream hardware and software, midstream smart components, and downstream vehicles. We judge that 1) the upstream of the industry chain (cockpit chip, virtual layer/operating system, middleware, application, and software/algorithm, etc.) has high technical barriers; among them, the middleware/interaction algorithm may be the core of the main engine factory to overcome the direction. 2) Downstream Due to the entry of new players such as new forces/Internet manufacturers, the iteration speed of models and new functions may be accelerated, showing a trend of intensified competition. 3) Midstream hardware combined with industry trends with a strong fixed point Release prospects, superimposed new forces / independent brands compared with the joint venture in the field of intelligent electrification more rapidly, optimistic about the corresponding technical capabilities of autonomous intelligent cockpit midstream hardware spare parts company fundamental improvement prospects.
2.3. Smart cockpit hardware market size
We estimate that the domestic smart cockpit market size is expected to reach RMB110.1 billion (about 22% from 2021 to 2025E Cagr) in 2025E; of which the central control screen, domain controller, and HUD are the most noteworthy segments. We expect that the 2025E central control screen market size is expected to reach 45.9 billion yuan (accounting for 42%); domain controllers, and HUD trends to high-end are expected to drive the volume and price to rise together, and the 2025E market size is expected to reach 13.3 billion yuan and 9.5 billion yuan (about 64% and 67% of E Cagr in 2021-2025, respectively).
1) The penetration rate of the central control screen is close to saturation (85% + penetration rate in 2021), and its product structure improvement (large size, dual screen trend) may become the core driving force for the increase of market scale.
2) AR-HUD with dynamic imaging advantages will become the final solution, and will be more deployed in high-end models, pulling the average price of HUD up (vs. low-cost C-HUD phase-out / W-HUD sinking to low-end models).
3) With the centralized development of electronic and electrical architecture, the penetration rate of domain controllers will be greatly improved, and high-end controllers using virtual machine technology may become mainstream (low-end domain controllers that can only integrate central control and instrumentation will be eliminated). (Source: Future Think Tank)
2.4. Panoramic sunroof/sky curtain glass accelerates penetration
The panoramic sunroof/canopy uses a new glass molding and hemming assembly technology to improve the user's driving experience by expanding the glass area of the car sunroof and integrating several functions.
According to the survey data released by Webasto 2021/8, the sunroof has become a component factor for more and more users to buy a car (willingness ratio is as high as 95.3%); among them, the main trends include 1) openable (94.3% of users tend to openable vs. fixed non-openable only about 5.7%), 2) large size (70% + in 2020 domestic sunroof penetration; of which, the panoramic sunroof accounts for 50%+), 3) shading system / roof mood light and other demand increased (96.2% Users are equipped with a shading system, and 67.0% of users prefer roof mood lights).
We judge that in 2020, Tesla's domestic Model 3 (configuration of the sky curtain) opens the volume, driving the panoramic sunroof / sky curtain to become an inevitable trend in the industry, 1) can expand the bicycle glass area of the car sunroof (panoramic sunroof / sky curtain about 1.5 + square meters vs. small skylight about < 0.5 square meters, large skylight about <1 sq.m.). 2) The price of bicycle glass that can raise the car sunroof (integrated sound insulation, heat insulation, UV protection, dimming, atmosphere lights, and solar energy and other functions). 3) It can help car companies to enhance the sense of design and fashion (in addition to the new energy vehicles with the canopy as the main configuration, traditional fuel vehicles have gradually accepted a stronger sense of design).
We judge that 1) the upstream core of the intelligent cockpit industry chain lies in the middleware and interaction algorithm (the technical requirements are high and the spare parts and OEMs are increasing investment), and the downstream or shows a trend of accelerated iteration speed / intensified competition; in comparison, the midstream hardware has stronger determinism of fixed-point amplification. 2) The core barriers of midstream hardware lie in higher capital investment, longer vehicle certification cycle, and customer base, and it is expected that the early layout of high-quality subdivision hardware (central control, HUD, domain controller, and sky/skylight glass), as well as spare parts suppliers that increase technical reserves are expected to benefit.
2.5、 Fuyao Glass
Fuyao Glass is one of the world's largest suppliers of automotive glass, and the company was listed on the main board of the Shanghai Stock Exchange (600660. SH), and was listed on the Main Board of the Hong Kong Stock Exchange in 2015 (3606. HK）。 Total operating income for the first three quarters of 2021 increased by 25% year-on-year to RMB17.15 billion, and net profit attributable to the parent increased by 51% year-on-year to RMB2.60 billion. The company's core products are automotive glass (1H21 total revenue accounted for about 90%, gross profit margin of about 34.6%); of which float glass self-supply ratio of about 90%.
We expect smart electrification to be a catalyst for the company's third round of step-ups. Optimistic about the company 1) the global market share is stable and rising, 2) the volume and price of bicycle automotive glass are rising, 3) the management lean operation/cost reduction management ability, 4) the improvement of the capacity utilization rate of aluminum trim and the long-term business synergy prospects.
Global automotive glass benchmarking enterprise, intelligent electrification has become the catalyst for the next round of growth: Fuyao is the world's leading automotive glass target (the current global/domestic market share of automotive glass sales is expected to be about 31%/70% respectively). In review, we believe that Fuyao's success can be attributed to 1) based on the company's precise positioning and industrial chain layout, 2) reasonable prediction of domestic and foreign auto market trends (successfully extending the domestic model to overseas markets), 3) sustained high R&D investment (high technical reserves of additional products), and 4) execution and lean operation and management capabilities. We expect smart electrification to be the catalyst for the company's third round of step-ups.
2025E The value of automotive glass bicycles may rise to nearly RMB1,200: The current global automotive market is still in the early stages of the transformation of intelligent electrification, and the company has clearly increased its R&D investment in high value-added products since 2014 (the R&D expense ratio has stabilized to about 4% vs. 2010-2013 is about 2%-3%). We judge that 1) the intelligent cockpit is the main driving force leading the rapid growth of the automotive glass market in the next stage; 2) the company has the industry-leading high value-added product technology reserves, as well as the technical ability to develop new products synchronously with the main engine factory, and it is expected that the penetration rate of the canopy and the head-up display will rise steadily, and the proportion of high value-added functions such as hemming products/sound insulation/heat insulation/HUD/dimming/atmosphere lights/solar energy may continue to increase (the prospect of single-vehicle glass volume and price rise is expected), and we expect 2020-2025E The annualized growth rate of the value of Fuyao Auto glass bicycles is expected to reach 10%.
Automotive glass market share increase + aluminum trim business extension can be expected, gross profit margin is expected to rise steadily: we judge, 1) Fuyao's automotive glass business positioning, technology and R & D capabilities (high value-added product reserves), as well as lean management and cost control capabilities are all industry leaders, and it is expected that the company's global market share will continue to grow Prospects (we expect 2023E/2025E Global OEM market share to be about 35%/40%, 2023E/2025E Domestic AM market share of about 30%/40%) 2) In view of the high input-output ratio of the aluminum trim business (we estimate about 1:3 vs. automotive glass business about 1:1), we are optimistic about the improvement prospects of the aluminum trim business driven by the gradual release of the company's orders / capacity utilization rate climbing, and the long-term business synergy prospects corresponding to the trend of product integration; 3) The proportion of lean management/cost control and high value-added product applications increases, or the gross profit margin is stable and rising (among them, the expected upward elasticity of the gross profit margin may mainly come from SAM). Capacity utilization and improvement in its gross margin).
2.6. Desay SV
Desay SV was founded in 1986 and is listed on 26/12/2017. The company focuses on the three major businesses of intelligent cockpit, intelligent driving, and network connection services, with 1H21 revenue of about RMB3.34 billion/ 570 million yuan / 170 million yuan respectively, +44% / + +183% / +121% year-on-year; of which, intelligent cockpit is the company's main business, 1H21 revenue accounts for 82%, the main products include large-screen cockpit products, digital instruments, intelligent cockpit domain controllers, etc.
2022/1/10 The company released a performance forecast, it is expected that in the absence of core and rising raw material prices, the performance of the company's three major businesses (intelligent cockpit, intelligent driving and network services) will steadily improve in 2021E; it is expected that the net profit attributable to the mother after deduction of non-deduction in 2021E will increase by 70%-81% year-on-year to RMB790-840 million.
We judge that the company has a relatively complete and diversified customer structure, as well as strong technology research and development / quality control capabilities; optimistic about 1) 0.5 level supplier positioning; 2) smart cockpit screen products steady growth; 3) intelligent driving bound NVIDIA, automatic driving domain controller incremental release prospects; 4) software / algorithm field extension capabilities.
0.5 level supplier positioning: On the basis of the head of high-quality customers (including Volkswagen, etc.), the company actively breaks through other mainstream car companies, and the customer structure is diversified and developed, and now covers independent, Japanese, and American car companies, and the total sales amount of the top five customers will drop to 55% in 2020 (vs. 61% in 2017). At the same time, Desay and OEMs collaborate to innovate and accelerate the transformation of 0.5-level suppliers, and in 2019, a joint venture company with FAW, Fusai Automotive Electronics (Desay SV holds 49.9%), operate around intelligent cockpits and intelligent driving.
Leading the market share of smart cockpit products: According to data from Gaogong Intelligence, the market share of Desay SV central control screen and LCD in 2021 reached 14.2% (ranked first) and 5.7% (ranked sixth), respectively; the market share of the new product cockpit domain controller reached 15.4%, ranking third, second only to Aptiv and Neusoft.
Intelligent driving is bound to NVIDIA, the card position is accurate: As the only Tier1 partner of NVIDIA in China, the Desay automatic driving domain controller IPU03 (equipped with Xavier) has been mass-produced on Xiaopeng and other models (2021 market share of 6.92%, ranking fourth); IPU04 (equipped with Orin) and Ideal to carry out strategic cooperation, is expected to be 2H22E mass production, the business or become an important force to drive the company's revenue in the future.
Strategic layout software research and development, the goal of full-stack self-development: In order to motivate executives and core technical personnel, the company set up five major employee shareholding platforms in 2015 (as of 3Q21, the total shareholding is 14.57%). In 2020, the company's R&D expenses were RMB701 million (R&D expense ratio of 10.31%); the number of R&D personnel reached 1,748 (40.69% of R&D personnel); more than 800 patents, participating in the construction of 30 national and industry standards.
2.7. Huayang Group
Huayang Group was established in 1993 and was listed on 10/13/2017. The company focuses on the intelligent and lightweight track of the automotive industry, lays out the four major business sectors of automotive electronics, precision die casting, precision electronic components, and LED lighting, and the revenue of 1H21 is RMB 1.35 billion / 430 million yuan / 170 million yuan / 0.8 billion yuan, year-on-year +96%/+72%/+2%/+29%; of which automotive electronics is the company's main business, accounting for 66% of revenue, the main layout of intelligent cockpit, intelligent driving and intelligent networking.
2022/1/25 The company released a performance forecast, automotive electronics intelligent cockpit business (including central control, HUD, wireless charging, and digital instruments and other products) and precision die casting business orders increased significantly, through the low-cost digestion of the impact of raw material price increases, the company's operating profit to achieve substantial growth; 2021E net profit deducted from the mother increased by 103% -120% year-on-year to RMB 240-260 million.
We judge that the company has the first-mover advantage of emerging products such as HUD, as well as the ability to bind independent car companies to continue to increase volume; optimistic 1) W-HUD product market position is stable / AR-HUD fixed-point volume trend is clear; 2) intelligent cockpit product line comprehensive layout; 3) customer expansion continues to advance; 4) focus on talent incentives and R & D investment.
HuD track has first-mover and technical advantages: 1) According to data from Gaogong Intelligence, Huayang Group's domestic market share of W-HUD in 2021 will reach 16.95% (vs 2020). <3.92%), ranking third, mainly due to the volume of popular models on the Great Wall. In addition to the Great Wall, in 2021, Huayang Group will undertake new projects such as Changan (CS75 Plus), Guangzhou Automobile (GS), BAIC, Dongfeng Nissan, Vietnamese Vinfast, and BYD (remodeled models). 2) Huayang Group AR-HUD core algorithm self-research, the number of related patents in China / the world's top ten. In 2020, it will be designated by GAC GS8, and the related products will be mass-produced in 2021, and in 2021, chery and Changan models will be newly designated.
Intelligent cockpit product line layout: The company is the most extensive enterprise in the domestic intelligent cockpit hardware layout, the products mainly include central control screen, LCD instrument, HUD, streaming media rearview mirror, driving recorder, and cockpit domain controller, etc., of which the intelligent cockpit domain controller provides two solutions based on Renesas SH3 and Qualcomm 8155 (in cooperation with Zhongke Chuangda), both of which have been selected as project points.
Binding to independent head car companies, the customer structure continues to be optimized: Huayang binds the Great Wall, mainly for its supply of central control screens, LCD instruments, streaming media rearview mirrors, head-up displays, and wireless charging. After 2020, Huayang Automotive's electronics business customer structure continued to optimize, and undertook new projects including Changan Ford, PSA, Beijing Hyundai, Great Wall, Chang'an, GAC, BAIC, Geely, Baidu, Nio, WM, and Jinkang Cyrus.
Focus on talent incentives and R&D investment: The company's internal incentive mechanism has been gradually improved, and the "2021 Stock Option Incentive Plan" was issued on 2021/9, which intends to grant 3 million stock options (accounting for 0.6325% of the company's total equity capital) to a total of 377 people, including managers and technical (business) backbone personnel. In 2020, the company's R&D expenditure was about 286 million yuan (R&D expense ratio of 8.47%); the number of R&D personnel reached 1,729 (R&D personnel accounted for 36.29%); and it has 582 patents, including 207 invention patents.
3. In-wire chassis
3.1. Overview and development trend of wire control chassis
The increase in the penetration rate of automobile electrification is expected to accelerate the promotion of intelligence. From the perspective of system splitting, automotive automatic assisted driving is mainly divided into 1) perception system (including visual perception led by on-board cameras and laser perception led by laser radar), combined with navigation systems such as GPS/IMU/Beidou, etc., to collect real-time data around the body; 2) transmission systems, through communication equipment such as components/V2X and communication technologies, the relevant data is transmitted to the decision-making system; 3) the decision-making system, through the use of chips, software/algorithms, and high-precision maps, etc., The corresponding path planning and decision signals are obtained; 4) the execution system takes driving decisions including brakes/warnings, etc. by receiving data from the perception system and the decision signals of the decision system.
The chassis by wire belongs to the execution system of automatic driving assistance of automobiles, which converts the mechanical signal released by the driver's operation into an electrical signal through the detector, and then completes the relevant driving decision through the controller and actuator.
We judge that, 1) Different from the force conduction method of the traditional chassis through the mechanical structure, the characteristics of the wire control chassis through the interaction of telecommunications numbers perfectly fit the development direction of automobile electrification/intelligence. 2) The simplification of the chassis mechanical structure / the increase in the number of automotive electronic spare parts is expected to further promote the lightweighting of automobiles, improve the efficiency of energy utilization, and improve the accuracy of vehicle handling, which is one of the inevitable trends in the development of the industry.
3.2. Split and prospect of the wire chassis
The wire control chassis mainly includes four major systems of line control, wire control steering, wire control shift, and wire control throttle; among them, 1) the current penetration rate of the wire control throttle is nearly 100%, and the market has been relatively mature; 2) Although the penetration rate of wire control shift is not high at this stage, but based on the demand for transmissions for new energy vehicles or gradually decreasing, it is expected that there is a corresponding development bottleneck in the gear shift by wire. 3) We expect that line control and wire control steering (especially line control movement) are still in the stage of technological breakthrough and have a large room for growth.
3.2.1, line control action (BBW)
Automotive brakes have evolved from mechanical brakes to vacuum-hydraulic brakes, and are gradually advancing towards line control. From the comparison between the vacuum liquid pressing motion and the line control action, 1) the line control action is assisted by the motor, and the vacuum assist device is cancelled, which is in line with the development direction of electric vehicles (vs. Traditional fuel vehicles form a vacuum boost through the pressure difference generated by the inhalation of the internal combustion engine; 2) the wire control system is equipped with more ECU controllers, which can maximize the use of the feedback braking force (regenerative force) generated by the motor, improve the energy recovery efficiency, and increase the range of the electric vehicle; 3) the line control action is better than the performance of the response speed, safety stability, and driving experience than the vacuum hydraulic brake.
From the specific classification of line control dynamics, it is divided into EHB (wet line control dynamic system) two box/one box, and EMB (dry line control dynamic system). We judge that 1) the current market application is mainly EHB two box (Bosch Ibooster, through esp system backup redundancy); 2) in view of the EHB one box's higher integration, light weight and more efficient energy recovery characteristics, or the main growth point in the next stage of the industry; 3) EMB is expected to be the ultimate solution for line control, but it is still in the early stages of technology incubation.
We judge that the rising penetration rate of new energy vehicles and the promotion of the market based on intelligent/electrification technology are expected to drive the rapid growth of the line control action; in the case of only considering the new energy vehicle market equipped with the line control action, we expect that the domestic line control dynamic market size of Cagr in 2021-2025E is about 42%-65%, and the growth prospects are promising.
From the perspective of development trends, we expect that the wire control market is expected to show a trend of fixed-point amplification and synchronous promotion of technological breakthroughs; 1) in the short and medium term, the rapid growth of the linear control dynamic market size is mainly based on the rise of electric vehicles and EHB penetration rates; 2) in the long run, the software/algorithm corresponding to energy recovery, and the EMB (dry line control dynamic system) are the main technical directions; 3) Compared with the full-stack self-developed software algorithm of the new forces focusing on the decision-making layer of automatic auxiliary driving, the domestic independent brand spare parts suppliers / The main engine factory has the ability to localize spare parts and is ahead of the joint venture car companies in the stage of intelligent electrification transformation, and is optimistic about the technical reserves and fixed points of independent brand spare parts suppliers in the field of online control and the corresponding fundamentals have been released to boost the prospects. (Source: Future Think Tank)
3.2.2 Steer-by-Wire (SBW)
Similar to automotive braking systems, automotive steering systems have also undergone gradual switching from the initial mechanical steering to hydraulic power steering systems (HPS) to the current stage of electric power steering systems (EPS), and may be further upgraded to steer-by-wire (SBW) in the future.
Comparing the technology advances from HPS to EPS to SBW, 1) compared to HPS, EPS eliminates hydraulic lines and generates steering power through the motor for better light flexibility; 2) Compared with EPS, SBW eliminates the mechanical link of the steering mechanism and uses two motors for road sense generation and turn assist, further improving lightweight flexibility.
We judge that 1) at this stage, the electric power steering system (EPS) has become the mainstream of the market, and the steer-by-wire (SBW) is the ultimate solution for the steering system; 2) it is expected that the technical breakthrough bottleneck of the steer-by-wire (SBW) is relatively limited, and the degree of policy openness and the debugging of software algorithms may be the core of whether SBW can be promoted.
At present, the domestic EPS penetration rate has reached a high level, but there is still a gap with countries such as Europe, the United States/Japan. From the classification of EPS, according to the installation position of the power motor of EPS, it can be divided into C-EPS (tube-column electric power steering), P-EPS (pinion type electric power steering), and R-EPS (rack type electric power steering); among them, the R-EPS power assist effect is better and the design structure of the motor installation position is the closest to the SBW.
We expect that 1) electric intelligence will drive the penetration rate of steer-by-wire steering to gradually climb, the number of superimposed electronic and electrical components will increase the corresponding trend of bicycle value, and it is expected that the market size growth space can be expected; 3) In view of the SBW design structure is the closest to R-EPS, it is optimistic about the spare parts suppliers that have accumulated technology in the field of R-EPS.
We judge that 1) line control and wire control steering are in line with the development direction of the state's support for the electric intelligence of automobiles, and are in line with the development trend of domestic substitution. 2) In view of the uncertainty of the degree of policy openness of the switch-by-wire steering and the technical difficulties of software algorithm debugging, it is expected that there may be a clearer prospect for the operation of the line control. 3) It is expected that the brake-by-wire is expected to show the trend of EHB fixed-point discharge and EMB technology breakthrough synchronous promotion; among them, independent spare parts suppliers with technical reserves in the EHB field are expected to benefit.
3.3. Bethel
Bethel was founded in 2004 and is listed on 2018/4 A shares. The company focuses on automotive brake parts, and its main business can be divided into mechanical brake products, electrically controlled dynamic products, and lightweight brake parts. 1H21 The company's operating revenue was approximately RMB1.54 billion, +32.8% year-on-year; among them, the revenue of mechanical brake products, electrically controlled dynamic products, and lightweight brake parts accounted for about 37.9%/31.5%/26.5% respectively. From the perspective of spin-off, the main products of electronic control dynamics include EPB electronic parking brake system, ABS anti-lock braking system, ESP electronic stability system, WCBS line control dynamic system, etc.
We judge that the company has a good technical accumulation in the field of automotive braking, a stable diversified customer structure, a strong ability to develop technology and quality control; optimistic 1) good mechanical, electrical control dynamic technology background; 2) WCBS one box program to meet the future technical development direction of wire control; 3) stable customer relationship.
The long-term accumulation of electronic control dynamic system technology has helped the development of a new linear control dynamic system: due to the complexity of the braking system, the development of the linear control dynamic system needs to consider the cooperation with other electrically controlled dynamic auxiliary systems. The company has mastered the more mature electronic control dynamic system product technology, such as ESP (electronic stability system), ABS (anti-lock braking system) and EPB (electronic parking brake system), so in the development of the new generation of line control dynamic products, compared with enterprises without electronic control dynamic system technology accumulation, occupy a greater advantage.
The successful SOP of line control dynamic products, the advantages of the one box solution are obvious: 2019/7 The company's line control dynamic products (WCBS) completed product research and development and new product releases, and by the end of 2020, 300,000 sets of line control dynamic production capacity construction (officially put into production in 2021) have been obtained, and two main engine plant fixed-point projects have been obtained. WCBS is a highly integrated one box solution, from the perspective of cost, space, lightweight, energy recovery, are the development direction of wire control dynamic products, compared with the two box program of line control dynamic products, with greater market growth space.
Good industry reputation, stable and diversified customer structure: the company also has the development ability of mechanical brake and electric control dynamic system, belongs to the first-class supplier of supporting braking systems directly to the automobile main engine factory, and has established a good cooperative relationship with a number of domestic independent brand main engine factories, providing prerequisites for the expansion of the future line control dynamic product market. Major customers include: General Motors, Stellantis, Geely Automobile, Great Wall Motors, BYD, Xiaopeng Motors, NIO Motors, etc.
Focus on R&D investment to maintain market competitiveness: The company invested about RMB140 million (+36% year-on-year) in R&D investment in the first three quarters of 2021, accounting for 6.2% of revenue. As of 1H21, the company has obtained a total of 228 patents (51 invention patents), and the next generation of linear control dynamic products (WCBS 2.0, L4 level) is in the smooth research and development stage.
3.4. Nexteer
Focusing on the automotive steering business, Nexteer was listed on the Hong Kong stock market in 2013/10 (formerly known as Jackson, Church & Wilcox, founded in 1906, became a wholly owned subsidiary after being acquired by GM in 1920, acquired by Pacific Century Automobile in 2010, and china Aviation Industry Group became the actual controlling shareholder of the company through its holding in Pacific Century Automobile in 2011). Nexteer's products include electric power steering, hydraulic power steering, steering pipe strings, and powertrain systems, and 1H21 revenue is about 1.21 billion/0.7 billion/300 million/160 million US dollars (the total revenue accounted for about 69.6%/4.1%/17.1%/9.2% respectively); among them, the core electric power steering system products include C-EPS, P-EPS, DP-EPS, and R-EPS, respectively.
As the world's leading steering and powertrain, advanced driver assistance system (ADAS), and autonomous driving (AD) enabling technology company, Nexteer is optimistic about Nexteer's ability to develop independently and fully integrate systems in the field of hardware and software/electronic components, as well as its competitive ability to provide comprehensive services to OEMs.
We judge that the company, as the world's leading electric steering system supplier, has a wide and diversified user structure, strong product development / quality control capabilities; optimistic 1) long-term accumulation of EPS system technology; 2) good long-term cooperative relations with customers; 3) focus on steering systems, future performance release space is huge.
EPS technology accumulation, strong software and hardware development strength: the company's EPS system has a long-term technical precipitation, R-EPS technology is leading the world. Given that the steer-by-wire system is similarly structured to R-EPS, it is expected that the company may have a first-mover advantage in developing the technical capabilities of SBW. In addition, the company has the ability to independently develop software and electronic components, or will further enhance the market competitiveness of its wire steering products.
Broad and stable customer base, cooperation and research and development of deep binding: As the world's leading automotive steering system supplier, Nexteer has established good relationships with more than 60 customers around the world (including BMW, Changan, GM, Ford, Toyota, and Volkswagen, etc.), and has put into production 16 new projects in 2021. It is optimistic that the company will cooperate with the automaker to develop steer-by-wire products, and further bind the basic advantages laid by the downstream OEMs in depth.
Focus on steering, growth can be expected: We expect the promotion of intelligent electrification, the penetration rate of the drive-by-wire steering system to increase step by step, and the value of bicycles to rise synchronously, and the market is expected to achieve a rise in volume and price. Nearly 70% of 1H21's revenue comes from electronically controlled steering products and superimposed technology reserves, and it is expected that the long-term release of performance prospects can be expected.
R&D investment is stable, and pioneering products seize the market: 1H21 The company invested $700 million in R&D, accounting for 4.3% of total revenue, year-on-year -5%. The company's development of the high-output rack EPS (HO REPS) is a market first; the silent steering wheel provides driver protection for advanced autonomous driving.
4. Integrated die casting
4.1. Overview of integrated die casting
Integrated die casting is a new type of manufacturing technology that transforms the complex structure of multiple parts on a body-in-white into a die-casting process that uses only one part.
The car body-in-white is the assembly of body structural parts and covering parts. The traditional automobile body is sheet metal welded structure, that is, "stamping + welding" mode, first the whole coil of steel or aluminum plate with a number of large presses continuously stamped into a small sheet metal parts, and then the stamped finished sheet metal parts welded into body structural parts, welded assembly is the body-in-white body. At present, except for the covered parts, all other structural parts and components are usually welded to the spare parts supplier, and the OEMs are responsible for welding the structural parts/components together with their own overlays into the body-in-white.
Compared with the traditional body manufacturing process, integrated die casting combines multiple components into one part, and adopts the method of die casting and one-time molding to greatly reduce the number of structural components; while reducing weight, it reduces process steps, manpower and land, reduces manufacturing costs, and improves automobile assembly efficiency.
4.2. Comparison between integrated die casting and traditional technology
Compared with the traditional "stamping + welding" process, the advantages of the integrated die-casting process include: 1) reduced single-vehicle manufacturing costs (the cost of aluminum alloy integrated die castings made of the back floor of the model Y can be reduced by 40%, and the cost is expected to be reduced or higher after the integrated die casting of the all-aluminum alloy body application); 2) reduce the cumulative error and improve the production yield; 3) simplify the manufacturing process and supply chain cycle to improve production efficiency; 4) improve the recovery efficiency 5) Improve body safety (the force of integrated parts is more uniform, and the rigidity of the body is improved); 6) reduce the quality of the vehicle equipment. However, there are also corresponding disadvantages including, 1) higher cost of machinery and equipment; 2) higher technical difficulties (requiring materials that are strong, malleable and do not require heat treatment; needing process parameters/yield and other experience accumulation, Tesla has used nearly a year to increase the yield of the integrated die-casting floor from 30% to 70%-85%); 3) the later maintenance cost is higher.
We believe that 1) the biggest advantage of integrated die casting lies in the lower cost of bicycle manufacturing, while the biggest pain point in the short term lies in the high investment in new equipment, the application of new material technology, and the accumulation of experience; 2) it is expected that the scale effect/yield improvement is expected to gradually hedge the depreciation amortization/cost pressure, and the advantage of integrated die casting may be gradually enhanced.
4.3, Tesla integrated die casting
Tesla Model Y uses an integrated die-cast rear floor assembly, which is the first in the industry. For Model Y, the all-in-one die-casting technology reduced its original nearly 70+ parts to just 1-2, reduced the weight of the body assembly by 30%, and reduced manufacturing costs by 40%.
For the promotion of Tesla's integrated die casting, 1) has independently developed a one-piece die-casting aluminum alloy material formula that does not require heat treatment, which can further compress the manufacturing time; 2) 2019/7 issued a new patent, which can press the molten aluminum alloy from the pouring port on the four mobile molds into the mold cavity, and finally form a large integrated die-casting structural part, and use this as a new die-casting method.
In addition, Tesla plans to further expand the application scope of Model Y integrated die casting, from the original 370 spare parts of the entire car assembly finally simplified to "front + middle + rear" three parts of the integrated die casting assembly, the weight will be further reduced by 10%, the corresponding mileage can be increased by 14%; 2) further increase the layout and model application of the integrated chemical die casting plant, in the United States Fremont / Austin, Texas, Shanghai, China, and Berlin, Germany 4 The vehicle factory may be successively installed with super-large die casting machines for the production of large automotive chassis or body die castings.
4.4. Integrated die casting industry trend and competitive pattern
Due to the huge advantages of integrated die casting in terms of cost and weight reduction, it is expected that major car companies will continue to refer to Tesra's solutions and technical processes to plan to apply integrated die casting to new intelligent electric vehicle platforms/models.
We judge that the climbing of the penetration rate of new energy vehicles and the promotion of intelligent electrification are expected to accelerate the application ratio of new materials such as aluminum alloys and integrated die-casting technology processes.
1) In the short term, in view of the high technical barriers and difficulties of integrated die casting, as well as the long period from the installation of production equipment to the actual production cycle (Tesla from the development of the corresponding materials and die casting methods to mass production takes two years), it is expected that the integrated die casting or mainly by the spare parts supplier is responsible. 2) In the long run, in view of the fact that the main engine factory may also be synchronous layout planning integrated die casting, it is expected that the dominant factor may be the yield of the technical process and the ability to reduce costs. 3) Parts manufacturers that are expected to cultivate in the traditional die casting industry for many years and have reached an integrated casting supply agreement with the vehicle manufacturer may be expected to benefit.
4.5. Wencan shares
Wencan was established in 1998 and listed on April 26, 2018. The company is mainly engaged in the research and development, production and sales of automotive aluminum alloy precision casting products, and the sales volume of automotive aluminum alloy castings in 2018/2019/2020 accounted for about 89.34%/90.37%/92.88% respectively, showing a steady upward trend year by year. Operating income in the first three quarters of 2021 was 2.965 billion yuan, +103.6% year-on-year; net profit attributable to the mother was 68.826 million yuan, -7.2% year-on-year, mainly dragged down by the price of raw materials such as aluminum but the price adjustment of the contracted products lagged behind.
We judge that the company is expected to rely on the traditional advantages in body castings, as well as technical reserves, to transform into one of the industry leaders in integrated die-casting aluminum alloy body castings, and is expected to achieve a volume and price increase in the aluminum alloy body casting market segment; optimistic about the company 1) clear market positioning and planning; 2) high-pressure advantage technology; 3) high-quality customer resources.
With core technology, competition in the blue ocean industry: 1) technical aspects, the company's core advantage process is high-pressure casting (casting mechanical properties are better, used for body die castings with strict requirements on strength); 2) production capacity, after the company's acquisition of the French Bailian Group, 11 new global production bases have been added, and it is expected that 2022E will cross the transition period and continue to release production capacity; 3) In terms of industrial chain, the company is one of the few companies in the industry with independent design, development and manufacturing of molds, which can respond quickly to customer needs. We judge that benefiting from the national lightweight and electrification policy, the penetration rate of aluminum alloy body die castings is expected to climb rapidly (currently 8%; vs. powertrain penetration rate of 90+%), and the company may be expected to become one of the leaders in the blue ocean industry with traditional advantages.
Bind high-quality customers and establish brand awareness: 1) The company has established a solid cooperative relationship with well-known vehicle manufacturers at home and abroad (the total sales revenue of Tesla, Xiaopeng, Weilai, Volkswagen and Mercedes-Benz accounted for 47% in 2020); 2) The company is striving to develop high-quality new customers (1H21 has established cooperation with BYD, Ideal, FAW Hongqi, etc.; it is promoting cooperation with Huawei).
Entering the integrated die casting and leading the development of the industry: 1H21 company purchased 7 large die casting machines including 2 sets of 6,000T (vs. Tesla now has or has 14 large die casting machines) for the development and production of integrated die casting products, and has reached a fixed point with a number of customers for the integrated body structural parts/integrated battery box box project. In the first three quarters of 2021, the company's R&D expenses increased by +84.7% year-on-year to 89.4134 million yuan (R&D expense ratio of 3.02%). It is expected that the company is expected to become one of the leading companies in the integrated die casting industry with industry experience and first-mover advantages.
4.6. Guangdong Hongtu
Guangdong Hongtu was established in 2000 and was listed on 2006/12/29 A shares. The company's main business includes precision aluminum alloy die casting parts, automotive interior and exterior trim parts, and special vehicle business; among them, automotive die casting parts (2018/2019/2020 sales accounted for about 58.48%/61.75%/62.55% respectively) are mainly used in engines, transmission components of cylinder head covers, oil pans, transmission housings, clutch housings, gear rooms, and new energy vehicle power systems and body structural parts of battery box housings, shock absorbers, subframes, etc.
According to the 2021 performance forecast, it is expected that the company's net profit attributable to the mother in 2021 will increase by 70%-90% year-on-year to RMB260-300 million, mainly benefiting from the increase in the proportion of revenue and cost control of the new energy vehicle business.
We judge that the company has an experienced R & D technical team, and has formed a number of strategic partnerships with customers who have formed a two-way dependence; optimistic about 1) the leading positioning of integrated die-cast aluminum alloy structural parts in the industry; 2) the extension capabilities of other aluminum alloy die-casting parts and other similar products in automobiles.
Successful trial production of ultra-large integrated aluminum alloy die-casting structural parts products: the company has obvious competitive advantages in R & D and design, the first three quarters of 2021 the company's R & D expenses of +12.2% to 200 million yuan (R & D expense ratio of 4.6%); its Guangdong Precision Die Casting Technology Research Center has a number of core die casting technology and technology such as vacuum die casting, and its technology research and development capabilities are leading in China. The company has independently developed high-strength and toughness heat-free aluminum alloy materials in 2022/1 and successfully trial-produced 6,900T new energy vehicles super-large integrated aluminum alloy back floor die-casting structural parts products, becoming the first domestic national brand enterprise to master the ultra-large integrated aluminum alloy structural parts die-casting production technology, and it is expected that the mass production prospects are promising, which is expected to drive the automotive die casting business to achieve rapid growth.
In the future, integrated die-casting or large-scale application of new energy vehicles is expected to become a catalyst: Tesla leads the global integrated die-casting technology process, and it is expected that new forces, as well as traditional models, will continue to follow up and adopt related integrated aluminum alloy die-casting structural parts products. We expect that in the short term, parts suppliers or OEMs will be the best choice for applying integrated die-cast structural parts on small batches of new models, and spare parts suppliers with corresponding technology research and development advantages are expected to benefit. The company is one of the independent parts suppliers in China with integrated die casting technology process and mass production capabilities; it is expected that with the increase in the penetration rate of integrated die casting, the company's performance growth prospects can be expected.
Continuous optimization of product structure: The company has actively expanded its customers in die-casting and automotive-related businesses; has cooperated with companies such as Lijin Group on the development of 12,000T super intelligent die-casting units to further improve the company's ability to develop ultra-large integrated die-casting products and maintain industry leadership; and plans to develop into multiple fields such as body chassis structural parts, new energy vehicle three-electric system parts, and 5G communication equipment parts and components to further diversify the product structure and broaden the driving force for performance growth.
(This article is for informational purposes only and does not represent any of our investment advice.) For usage information, see the original report. ）
Featured report source: [Future Think Tank]. Future Think Tank - Official website