Intelligent driving, the heat continues!
Since the second half of 2023, from Huawei cars to Xiaomi cars, the discussion about intelligent driving has never stopped. It can be said that whoever masters the leading intelligent driving technology will occupy the commanding heights of new energy vehicles. For example, the question of Cialis is to rely on Huawei's advanced intelligent driving to maintain a leading sales rate.
BYD, which has always paid little attention to intelligent driving, also announced in March 2024 that it will be equipped with NVIDIA's DRIVE Thor chip and use its AI infrastructure to train a large model of intelligent driving.
So, what are the components of intelligent driving, and what are their functions?
Intelligent driving is divided into three parts: perception layer, decision-making layer and execution layer, which correspond to three functions: collecting information, processing information, making instructions, and executing instructions.
Perception layer: It is composed of a variety of sensors, such as in-vehicle cameras, ultrasonic radar, millimeter-wave radar, lidar, etc. The role is to perceive the surrounding environment and collect data to transmit to the decision-making layer.
Decision-making layer: It is composed of hardware devices and software such as chips and domain controllers, which is equivalent to the human brain, and can carry out activities such as path planning, behavior decision-making, and motor planning.
Execution layer: It is mainly the chassis by wire, including brake-by-wire, steering-by-wire, drive-by-wire, and suspension by wire (air suspension), which is responsible for executing the instructions of the decision-making layer.
Brake-by-wire in the executive layer is a key link in realizing intelligent driving. Because the core technology of intelligent driving control, longitudinal control (drive, brake control) and lateral control (steering control), are inseparable from the braking function.
Bethel is the strongest leader in domestic brake-by-wire, and it is also the first listed company on the main board of Chery Holdings.
Bethel started out as a manufacturer of mechanical brakes, such as disc brakes and brake calipers. With the development of automotive intelligence, intelligent electronic control products have been gradually developed, such as ABS (anti-lock braking system), EPB (electronic parking brake system), ESC (electronic stability control system), WCBS (integrated brake-by-wire system), etc.
In addition, the company is conducting research on air suspension to accelerate the full line coverage of the chassis-by-wire. After the empty suspension landing, the value of the bicycle of Bethel's supporting products will increase from 2,000 yuan to 10,000 yuan.
Chery is a manufacturing car company of Huawei Zhijie, and Bethel provides wire-controlled products for Wenjie, so it can be said that the company has a very close cooperative relationship with Huawei.
So, what are Bethel's core competencies?
- The actual controller has a technical background and strong profitability
Bethel is the former Vice President of Bosch and has 20 years of industry experience in the field of auto parts and a deep technical background. The chairman is also a technical background, and can lead the company to continue to make breakthroughs in the key links of automobile braking and achieve domestic substitution.
Thanks to this, the company's performance maintained a steady increase. From 2019 to 2023, the company's revenue increased from 3.157 billion to 7.474 billion, and net profit increased from 402 million to 891 million, with strong growth.
What's even more rare is that Bethel's profitability is also very good.
ROE ROE, the ratio of net profit to net assets, can be used to measure a company's profitability.
On the whole, the quality of companies with ROE of more than 15% for many years in A-shares is good, such as Kweichow Moutai, Haitian Flavor, Gree Electric, etc., which is also one of the commonly used indicators when Flying Whale screens good companies.
From 2014 to 2023, Bethel's ROE exceeded 15% for 9 consecutive years, far exceeding comparable companies such as Tuopu Group and iKedi. In addition, manufacturing companies account for a large proportion of raw material costs, making hard-earned money, and it is not easy to maintain a high ROE value.
- In the field of wire-controlled chassis, the technical reserve is sufficient
The traditional control technology adopts mechanical and physical connection, and controls the steering and driving of the body through hydraulic pressure and pull rods. The wire-controlled chassis replaces mechanical signals with more efficient and accurate electrical signals, which is very important in the entire intelligent driving process.
With the increase in the penetration rate of intelligent driving, the scale of the domestic wire-controlled chassis market continues to expand, and it is expected to reach 57 billion yuan in 2026 and 142 billion yuan in 2030.
In addition, Bethel's wire-controlled chassis subdivision products have sufficient technical reserves.
First of all, Bethel is the first leader in domestic BBW and the first company in China to mass-produce the ONEBOX integrated solution of BBW, the first to break through the technical blockade, and its strength is far ahead.
According to data from the Ministry of Industry and Information Technology, Bosch has 152 BBW supporting projects and Bethel has 130, and the company has stood in the same echelon as Bosch.
Secondly, in April 2022, Bethel successfully entered the field of automotive steer-by-wire through the acquisition of Wanda Automobile. The product coverage is also comprehensive, including steering basic parts and supply assemblies.
Finally, the air suspension is highly feasible to land. Because the core components of the air suspension CDC shock absorber and the core components of the brake-by-wire are solenoid valves, the two technologies are of the same origin. With a penetration rate of only 3% in 2023, air suspension is a huge emerging market.
3. The logic of going overseas is clear, and the scope of customers is constantly expanding
The abundant production capacity in the domestic market and the short supply in the foreign market are the fundamental logic of the vehicle and auto parts going overseas.
At present, the first phase of Bethel's plant in Mexico has been put into operation, mainly producing lightweight parts and brake products, and the second phase of the plant will also achieve mass production ramp-up in the fourth quarter of 2024. Moreover, the gross profit margin of overseas products is generally higher than that of domestic products, and it is expected that Bethel's performance in 2024 will be able to reach a new level.
In addition to exporting its products overseas, Bethel's customer range is also expanding. From domestic brands such as Geely, Chery, Changan, SAIC, BYD, and Wei Xiaoli, to international car companies and joint ventures such as General Motors, SAIC-GM, Changan Ford, and Volvo.
Due to the discontinuation of auto parts supplier Sadiq, the company directly supplied lightweight products to GM and Ford Global, completing the transformation from a tier2 supplier to a tier1 supplier, and further improving its position in the industrial chain.
In terms of valuation, the company's P/E ratio in the past three years is in the range of 25-85 times, and as of April 3, 2024, Bethel's dynamic P/E ratio is 26.5 times, which is in the undervalued range in the past three years.
Finally, to sum up. Bethel is a brake-by-wire leader, with a comprehensive technical layout in the field of wire-controlled chassis, and the logic of products going overseas is also very clear. In addition, the company's growth and profitability are good, and Davis is expected to achieve performance and valuation.
By the end of 2023, a total of 693 institutions have rushed to raise funds, including E Fund and the Social Security Fund.
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Source: Flying Whale Investment Research