(Report Producer/Author: Guojin Securities, Chen Chuanhong, Qiu Changwei, Xue Shaolong)
First, the car audio ushered in an upgrade, and the value of bicycles increased by 10 times
1.1 New energy vehicle inner volume increase, car audio upgrade
Car audio system composition: speakers, amplifiers, AVAS, etc. A complete set of sound system consists of the host, speakers (including low frequency, intermediate frequency, high frequency, full frequency, subwoofer, etc.), power amplifier (connect the host and speaker, the audio signal is selected and pre-processed, to achieve audio signal amplification and improve sound quality), AVAS (automotive acoustic alarm system, used on electric vehicles to warn pedestrians) and so on.
1.2 The new energy vehicle is equipped with an increase in the inner volume, and the audio is used as a selling point, and the number of speakers is increased by 3-5 times
The new energy vehicle is equipped with more rolls, the audio is used as a selling point, and the number of speakers is increased by 3-5 times. Under the big wave of intelligent electrification, new forces generally seek differentiated selling points to attract consumers in terms of matching, and the audio system, as a consumer-friendly accessory, has become one of the important selling points of new power models (typical such as Weilai, Huawei, etc.). The upgrade of the audio system is easier to feel in terms of the number of speakers: taking the fuel car as an example, the best-selling Toyota Corolla has 4-6 speakers, and high-end models such as the Mercedes-Benz S-Class have 15 speakers and can optionally be equipped with 31 speakers (76,700 yuan). The number of model speakers launched by the new forces is generally 8-12, and the number of speakers in some models is more than 20 (such as Tesla Model X, WEILAI ET7/ET5, Qingjie M5, etc.); thus driving the number of new model speakers launched by traditional forces to increase significantly, and the number of standard speakers in some models is about 12.
The audio accessories have been upgraded, and independent amplifiers, subwoofers, headrest audio and other products have been added. The upgrade of the new energy vehicle speaker is only an apparent indicator, with the improvement of sound quality and the improvement of the number of speakers, it is necessary to add new power amplifiers, subwoofers and other accessories to achieve better sound effects, in addition to high-level accessories such as headrest audio (such as Changan UNI-K). In the past, in the low-to-medium models, the power amplifier was integrated in the main engine; the main engine factory required an improvement in sound quality and needed to be equipped with an independent power amplifier. Power amplifier is divided into digital power amplifier and analog power amplifier, digital power amplifier compared with traditional analog power amplifier has the characteristics of high stability, strong anti-interference ability, small distortion, low noise, large dynamic range and so on. The digital power amplifier system has a DSP processor that adjusts the vehicle sound field, phase, balance and audio and video aspects to improve the quality of sound output, and with acoustic signal processing algorithms, digital power amplifier products can achieve more expansion functions, which is an indispensable match for improving sound quality.
1.3 The value of bicycles increased from 150 yuan to 1500 yuan, a 10-fold increase
With the upgrading of the sound system, the bicycle value of the audio system has increased from 100-150 yuan of the original 4-6 speakers to 1500 yuan (12 speakers + amplifier + subwoofer + AVAS), and the value has increased by 10 times.
Second, in the face of the car audio industry, the most concerned issue of the market: how fast will the audio upgrade speed be? How to view the new competitors of amplifier products such as automotive electronics and consumer electronics companies?
Through the review of the upgrading of the consumer electronics acoustic track, we found that: (1) In the 09-13 years of rapid penetration of smart phones, the largest market value, the largest stock price increase, and the fastest performance growth were The Goertek shares of the acoustic track, and its revenue in 4 years went from 1.1 billion to 10 billion yuan. (2) The reasons for the high growth of Goertek's performance: smart phones and Apple mobile phones compound more than 50% growth; acoustic track value growth of 9 times; domestic substitution, the share gradually increased. It is very similar to the logic of the current car audio industry. (3) Although the acoustic track in the consumer electronics industry is relatively early to upgrade and slow down (compared to the camera field), the current car audio field is in the early stage of upgrading (the current average bicycle is only 4-6 speakers, the value of 100-200 yuan), the value of the upgrade space is vast (can be expected 1000-2000 yuan), similar to the upgrade of the consumer electronics acoustic track around 2009.
By analyzing car audio competitors, we found that: (1) Among car audio suppliers, white-label manufacturers are better than brand manufacturers. Mainly: brand manufacturers R & D, marketing costs are high, and the shipment volume is not large, it is easier to lose money; brand audio has a strong consumer stickiness, the market share ceiling is obvious, can only continue to expand the share through mergers and acquisitions; (2) the car audio industry domestic substitution acceleration. The new electrical and electronic architecture to achieve the separation of software and hardware, white-brand audio through a better cost-effective erosion of brand audio share; white-label audio belongs to the typical manufacturing industry, stable profitability, and domestic suppliers have a strong advantage, excellent enterprise market share can be continuously improved. By analyzing potential competitors (automotive electronics and consumer electronics companies), we found that: (1) consumer electronics companies began to enter the car audio field before 2010, but at present, the revenue scale is very small, such as The Wanderer entered the automotive field in 2006, and the revenue in 2020 is only about 20 million, and most of them are aftermarkets; (2) The barriers to entry of car audio are high, and the front-loading market is particularly high, mainly: vehicle-level barriers and customer development barriers. (3) Although the power amplifier is partial to automotive electronics from the product attributes, the top ten brands of the power amplifier are basically audio companies, and there are few automotive electronics and consumer electronics companies; power amplifier products need to be proficient in the performance characteristics of speakers and audio processing technology.
We combed the Tesla audio system and found that: (1) the audio system will be upgraded with the electronic and electrical architecture, Tesla as early as 2012 to use the independent power amplifier program, and the use of soft and hard separation solutions, speaker, power amplifier, tuning are used different suppliers; (2) Tesla's latest generation of MCU3, the power amplifier and audio processing are integrated into the domain controller, whether other manufacturers follow it remains to be seen.
2.1 Consumer Electronics Acoustics Review: Acoustic value increased by 9 times, and the revenue of Goertek increased by 10 times in 4 years
2.1.1 In 2009-13, goertek shares rose 5 times, leading the market value
The largest and largest increase in market capitalization and the largest increase in 2009-13 was Goertek in Acoustic Circuit. From 2009 to 2013, the two companies in the acoustic track, Goertek and AAC Technologies, performed the most prominently, mainly in the following ways: (1) the largest market value in the field of consumer electronics at the end of 2013, and the gap with the third and fourth market capitalization was larger; (2) from the end of 2009 to the end of 2013, Goertek and AAC Technology rose significantly, with an increase of 569% and 224% respectively.
2.1.2 High performance growth, 4 years of revenue from 1.1 billion yuan to 10 billion yuan
Behind the increase in stock prices is the high performance growth. From 2009 to 13, Goertek's revenue increased from 1.1 billion yuan to 10 billion yuan, a compound growth rate of 73%, and the net profit attributable to the mother increased from 100 million yuan to 1.3 billion yuan, with a compound growth rate of 90%. From 2009 to 13, AAC's revenue increased from 2.2 billion yuan to 8.2 billion yuan, a compound growth rate of 38%, and the net profit attributable to the mother increased from 600 million yuan to 2.6 billion yuan, with a compound growth rate of 43%.
2.1.3 Acoustic device upgrade, 9 times the value of growth, superimposed smartphone high growth rate & domestic substitution
Reasons for high performance growth:
Quantity increase + product upgrade, the value of acoustic devices increased by 9 times. Acousto-optics and electricity belong to the more obvious field of consumer perception, and acoustics is also the first track for smart phones to upgrade, and the idea of upgrading is smaller, better performance, and better sound quality (such as HiFi stereo). Microphones: Upgrade from traditional ECM to MEMS microphones, and the number of MEMS microphones increases from 1 to 4; Speakers: From a single Speaker to Speaker box; Receiver: From a single Receiver to Receiver module or even Receiver box.
Smartphone shipments are growing rapidly. From 09 to 13 years, the global smartphone penetration rate increased rapidly, from 14% in 2009 to 56%, the compound growth rate of global smartphone shipments was 55%, and the compound growth rate of iPhone shipments was 57%.
Localization of parts. Since it is more difficult for foreign-funded parts companies to meet Apple's higher requirements for supply chain cost reduction, rapid iteration, and production capacity matching, the advantages of domestic parts companies in these aspects have been highlighted, and they continue to replace the share of foreign parts companies. Taking MEMS Microphone as an example, the share of foreign leading supplier Lou's Electronics fell from 67% in 2011 to 32% in 2020, while the share of Goertek increased from 3% in 2011 to 33% in 2020. It can also be observed from the revenue of the four acoustic companies that the revenue of domestic suppliers Goertek and AAC has grown rapidly, surpassing foreign suppliers such as Meilu and Lou's. (Source: Future Think Tank)
Compared with the smartphone penetration curve, the penetration rate of new energy vehicles is still in its infancy. Smartphone penetration rate exceeded 10% in 2007, and since then the penetration rate has increased rapidly; we expect that in 2022, the global sales of new energy vehicles will exceed 10 million, and the penetration rate will exceed the 10% mark, and the penetration rate of new energy vehicles is still in its infancy, and the upgrade of the same audio system is still in its infancy, and there is more room for improvement in the future.
Third, the automotive acoustic track: software and hardware decoupling + domestic substitution, the share of high-quality domestic white-label merchants accelerated
3.1 Brand owners: poor profitability, the need for continuous acquisition to increase market share
Car audio is mainly divided into two categories: brand audio and white-label audio, of which the typical representatives of brand audio are: Harman Kardon, Dana, B&O, B&W Baohua Weijian, BOSE, etc.; the main customers of white-label audio are car companies (directly supply audio to car companies, there is no brand Logo) and brand audio (to provide speakers and other products for brand sound, paste the brand's logo), typical representatives are Shangsheng Electronics, Prim, Fengda Motor, Jilin Hangsheng, etc.
Car audio brand owners are not profitable. Based on the analysis of car audio companies that disclose financial data, HARMAN has a large revenue scale (between 6 billion yuan and 7 billion yuan in 2015-2016) and an operating profit margin of 7%-10% (2015-2016 data), which is relatively good. However, danna, B&O and other companies with smaller revenue scales are less profitable, B&O revenue scale is about 2-3 billion yuan (2016-2020), 2016-2019 operating profit margin is between -5% and 5%, 2020 operating margin fell to -15%; Danna (acquired by Goertek in 2014) 2016-2019 revenue scale of about 300 million to 400 million, in a serious loss state. In contrast, white-label enterprises, such as Fengda Motor and Shangsheng Electronics, have relatively stable profits, and the operating profit margins are maintained at about 6% and 8% respectively.
Reasons for poor profitability for car audio brands:
Sales are difficult to scale. Taking the Chinese market as an example, according to the data of Autohome, the number of popular audio brand models including B&O, BOSE, Danna, etc. accounts for only 9.5%, and considering that these popular audio brands are mainly equipped with more than 300,000 models, if calculated according to sales, the proportion will be much less than 10%.
Selling expenses and research and development expenses are higher. Compared with the white-label manufacturer Shangsheng Electronics and the brand manufacturer B&O, B&O's gross profit margin is about 40%, higher than the 28% of Shangsheng Electronics; but B&O's sales expense ratio is about 25%-35%, much higher than the 3%-4% of Shangsheng Electronics; B&O's research and development expense rate is about 12%-14%, much higher than Shangsheng Electronics' 4%-6%.
Brand audio: There is a sales ceiling for a single brand, and mergers and acquisitions are the main way to expand the share. Brand audio generally has a high consumer stickiness, and the expansion of share is mainly through mergers and acquisitions. Typical examples such as HARMAN International and Sound United have expanded their revenue scale and market share through continuous mergers and acquisitions. The willingness of these brands to be acquired also shows that they are prone to losses when the sales of a single brand are limited (typical such as B&O and Dana, etc.).
3.2 White-card merchants: stable profits, high ceiling market share, and large domestic replacement space
White-label audio: the profit is stable, and domestic suppliers increase their market share through cost performance. White-brand audio companies are typical manufacturing industries, and their profits are relatively stable; at the same time, domestic suppliers also show the cost-effective advantages of domestic manufacturing, and continue to seize the share of foreign-funded white-label enterprises (such as Prim, Fengda Electromechanical, etc.).
New energy vehicles pursue cost reduction, and white-label merchants replace brand owners. The new forces of car manufacturing in the pursuit of quality at the same time to pursue the pursuit of cost reduction, the use of white-label audio cost reduction significantly, white-brand audio cost is generally lower than the brand audio 20% -50% (some BOSE speakers are the purchased sound electronic products, in addition to the brand B&O as an example, 25% -35% of the revenue is spent on marketing / sales).
3.3 Software and hardware decoupling: accelerate the replacement of domestic hardware manufacturers with brand owners
From traditional cars to smart cars, the change of electronic and electrical architecture is the most important core change, and the electronic and electrical architecture has moved from distributed to centralized. In smart cars, OEMs want to master software algorithms and define various scene modes of sound systems, such as Tesla can adjust the center position of the sound source, define different smart cockpit scene modes, and the demand for hardware changes to "plug and play" white-card audio. In the era of fuel vehicles, the set of successful discharge (integrated in the host) requires the main engine factory to open the CAN bus communication protocol, and the main engine factory is unwilling to open the CAN communication protocol to domestic power amplifier manufacturers for communication security and other considerations. The new forces adopt a new electronic and electrical architecture, the power amplifier becomes "plug and play" hardware, and the white-label amps, AVAS and other products can have the opportunity to enter the supply system of the new forces.
Fourth, acoustics + car rules + customer barriers are high, not afraid of new entrants
4.1 Car speakers: On-demand electronics have shown competitive advantages, and consumer electronics companies are more difficult to enter
Car speakers involve electromagnetics, vibration, acoustics and other fields, and there are many evaluation indicators. Vehicle speaker is mainly a dynamic speaker, composed of vibration system, magnetic circuit system and auxiliary system three parts, the working principle involves electromagnetics, vibration, acoustics, thermal and other physical fields, measuring the quality of the speaker performance indicators include rated power, rated impedance, resonance frequency, frequency response range, Qts (total quality factor value, reflecting the transient response of the speaker unit), directivity, sensitivity, distortion and other key performance indicators.
There is basically no technical gap in the magnetic circuit of the car speaker, and its main differences are reflected in the three aspects of diaphragm material, shape development and sound splitter (design concept of sound balance).
The key to measuring the quality of a speaker lies in the rated impedance, frequency response range, sensitivity, rated power, and so on.
Rated impedance: indicates the ratio of voltage and current of the input signal of the speaker speaker, in general, the larger the rated impedance, the better;
Frequency response range: is the frequency range that the speaker can play, in general, the frequency response range of the speaker is wider The sound quality is better;
Sensitivity: Not the higher the better, under normal circumstances, the increase in the sensitivity of the speaker is often at the expense of distortion, so the requirements for the sensitivity of the speaker should not be too high;
Rated power: means that in the rated frequency range to the speaker a specified waveform of the continuous simulation signal, after a certain time interval and repeat a certain number of times, the loudspeaker speaker of the speaker does not occur any damage when the maximum electrical power, generally speaking, the greater the rated power of the product the better;
The car speaker market is already well competitive, and UPONIC electronics has shown a competitive advantage. In the field of automotive speakers, the global share of Shangsheng Electronics is about 12%, and the domestic share is about 20%, which proves that the company's products have strong competitiveness. The company's gross profit margin is about 28%, net profit margin is about 8%, and profitability is good.
The automotive business of consumer electronics is not highly revenuey, and there are strong barriers to entry. Some consumer electronics acoustic companies have also expanded the field of car audio, but the overall revenue volume is not large. For example, In the case of Wanderer and Huiwei Technology, its revenue in the field of car audio is about 10-20 million, and the income volume is small. Goertek shares entered the car audio field through the acquisition of Danna (if the barriers are not high, there is no need to enter the automobile field through acquisition), and after the acquisition, Danna's revenue scale and profit have not increased significantly.
Wanderer and other home audio and consumer electronics audio companies, the scale of car audio revenue has not been larger, and mainly do the aftermarket, indicating that the car audio front-loading market has a high barrier to entry. In 2006, the revenue of Wanderer Multi-media audio reached 470 million yuan, which was relatively large, and in the same year, the company also officially entered the field of car audio, intending to expand new areas. By 2020, the company's car audio revenue will only reach about 20 million yuan, and the headphone business that has been expanded later has risen from about 10 million yuan in 2007 to 1.2 billion yuan in 2020. At the same time, The Wanderer car audio is mainly concentrated in the aftermarket, indicating that the barriers to entering the car audio frontal market are relatively high.
Barriers for consumer electronics to enter in-vehicle speakers: market space, industry certifications, customer resources.
The market space of traditional car speakers is smaller than that of consumer electronics: mobile phone acoustic market space: according to the annual shipment volume of 1 billion +, the value of a single machine is 50 yuan, the global market space is about 50 billion yuan, considering the flat panel, computer and other markets is larger; the car speaker market space: according to the global 100 million vehicles, traditional fuel vehicles The price of bicycles is 100-200 yuan, the market space is about 100-20 billion yuan. Before the car audio system upgrade, the market space has not been opened, and it is not as large as the mobile phone acoustic market space.
Vehicle-level certification barriers: To achieve automotive standards, the reliability standard AEC-Q series and quality management standard ISO/TS16949 certification are required, and the automotive industry has more stringent requirements for failure rates. Taking the on-board chip as an example, the basic requirements of the car factory for the failure rate are single digit PPM (parts per million), and most car manufacturers require the PPB (part per billion) order of magnitude, compared with the failure rate requirement of industrial-grade chips is less than one part per million, while the failure rate requirement of consumer chips is only less than three thousandths.
Customer development barriers: Generally speaking, it is relatively easy to enter the supply chain of independent brands, but entering the German and Japanese supply chains has higher requirements for product quality and management systems, and car companies do not easily replace suppliers, which has certain challenges for newly entered consumer electronics companies.
4.2 Power amplifier: Acoustic KnowHow, patents, chips and other barriers, not afraid of new entrants
Car audio upgrades, the market space expanded by 5-10 times. In the context of the improvement of the sound quality of the car audio by new energy vehicles and the decoupling of the software and hardware of the new electronic and electrical architecture, the emergence of independent power amplifiers, AVAS and other markets, according to the value of bicycles 1000 yuan, the global 100 million vehicles, the market space of about 100 billion yuan, is the traditional car speaker market 5-10 times, or will attract more new entrants into the field.
In the automotive power amplifier market, (potential) competitors can be divided into four categories: (1) vehicle speaker companies represented by sound electronics; (2) car brand audio companies represented by HARMAN; (3) automotive electronics companies represented by Desay SV; (4) consumer electronics acoustic parts companies represented by Goertek.
From the results: the top ten brands of power amplifiers are basically audio companies, and there are almost no new companies entering automotive electronics and consumer electronic acoustics (except Sony). From the perspective of market space, the application scenario of the power amplifier is not limited to the car, but also widely used in stage audio, AV speakers, Hi-Fi audio, home theater audio and other fields, there is no problem because the market space is too small to be worth entering. Judging from the results, few automotive electronics and consumer electronics companies have become bigger in the audio field, indicating that there are higher barriers for such new entrants.
Amplifiers, unlike ordinary automotive electronics, require proficiency in loudspeaker performance characteristics and audio processing techniques. Taking the above acoustic electronics as an example, the company has accumulated more technologies and patents in the fields of vehicle sound design, acoustic signal processing, and digital speaker systems, and has formed a high technical barrier.
Shangshan Electronics carried out the development of digital speakers earlier and made breakthroughs in the field of chips. Since 2009, the company began to develop digital speaker system technology, in 2013 to achieve a technical breakthrough in oversampling, noise shaping, error dynamic correction and other core algorithms, and in 2014 to complete the digital speaker SoC chip in the encoding chip of the sample development, the current coding chip has completed the technical verification, can achieve mass production of tape-out. Since 2015, the company has continued to develop digital power amplifier chips in digital speaker SoC chips, and constantly checks and improves the design of chip samples to improve its performance, and the latest version of digital power amplifier chips has passed the company's internal index test and environmental testing, basically meeting the application conditions.
4.3 Tesla's latest generation of domain controller sets were successfully released
Tesla's Media Control Unit, referred to as MCU, has undergone MCU1 and MCU2, ushered in the MCU3 upgrade at the end of 2021, equipped with AMD Ryzen chips, and began deliveries in the United States and China in November 2021.
Original Tesla sound system: independent power amplifier (foreign supplier) + speaker (upper sound electronics) + tuning software, etc. (B&O). In the original Model X and Model S, the sound system was first developed by the S1nn design, which was integrated in Tesla's MCU, using a DSP processor to control the sound effects and allow the designer to flexibly tune each horn on the car, and the amplifier (Amplifier) is located on the back of the MCU. Speakers are supplied by Upper Sound Electronics, and FM, FM HD and AM Tuner modules are supplied by Panasonic (the module is eliminated in MCU2). Tesla's audio engineers, from B&O and other companies, source the best speakers and amplifiers on the market and design the tuning and software.
The latest generation of domain controllers, Tesla integrates amplifiers and the like into the MCU. The Tesla MCU3's audio system uses two ADI SHARC+ high-performance floating-point ADSPs, namely the SC587W and AD21584, with the AD21584 for active road noise reduction and the SC587W with ARM Cortex-A5 with two RAM. Amp part is 3 x 4-channel output Class D, 6 sets of inductors directly above the amplifier for Class D output filtering, support 12 channel output, acoustic power 960 W, a total of 22 speakers, independent amplifiers are also integrated into the MCU.
Fifth, the sound of electronics: an excellent leader in the automotive acoustic track
5.1 Deep cultivation of car speakers for more than 30 years, global market share of 12%
Shangsheng Electronics was established in June 1992, the main vehicle speaker system and power amplifier, AVAS products (electric vehicle acoustic warning system), the predecessor is a township enterprise founded in 1975 "Wuxian Radio Components Factory No. 1". In the field of car speakers, the company's global share is about 12%, and the domestic share is about 20%, which proves that the company's products have strong competitiveness. The company's gross profit margin is about 28%, net profit margin is about 8%, and profitability is good.
5.2 Power amplifier and other products, the value of bicycles increased from 200 yuan to 1000-2000 yuan
In the first half of 2021, the sales volume of on-board power amplifier products was 50,000 pieces, an increase of 222% year-on-year, achieving rapid release (2019 annual sales of 2019); benefiting from the rapid growth of new energy vehicle sales, the company's AVAS product production and sales were 299,700 and 298,600, respectively, an increase of 217% and 241% year-on-year. The amount of power amplifiers and other products has boosted the value of the company's bicycles from about 200 yuan to 1000-2000 yuan. (Source: Future Think Tank)
5.3 Winning a large number of new force projects is expected to achieve volume and price increases
The company has a high global market share of car speaker products, covering most of the high-end OEMs including Bose Audio (Dr. Audiovisual) and so on. According to the disclosure of the company's prospectus (disclosed in April 2021), the company's customers include: Volkswagen Group (including its subsidiaries Audi Corporation, Bentley Motors, etc.), Ford Group, General Motors, Dr. Audiovisual, Peugeot Citroen, Tesla, SAIC Group, SAIC Volkswagen, SAIC-GM, Dongfeng Motor, Great Wall Motor, Chery Automobile, Geely Holdings, Weilai Automobile, WM Motor. In addition, the company's 2021 interim report disclosed that the company has obtained a fixed-point letter for new projects from many well-known automobile manufacturers such as BYD, Weilai Automobile, Tesla, Daimler, Zero Run, Ideal, and Huawei Jinkang. The increase in the value of the company's bicycles, with the new orders, is expected to achieve greater flexibility.
5.4 Smart cockpit high-quality targets, volume and price increase revenue elasticity
With the upgrade of the intelligent cockpit, the requirements of the main engine factory for the sound system have increased, driving the sound system from 200-300 yuan to 1000-2000 yuan. The company itself has excellent texture, high market share in the field of car speakers (20% domestic, 13% global), and the amount of power amplifiers, subwoofers and other products has increased the value of bicycle supporting from about 200 yuan (only for speakers) to about 1500 yuan (providing the entire audio system hardware). And the company has a higher share of new forces, entering the supply system of the vast majority of new forces (such as Tesla, Weilai, Ideal, Weima, Zero Run, Huawei, etc.) and traditional car companies (such as BYD, etc.), and will enjoy the greater revenue elasticity brought about by the rise in product volume and price.
(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].