On the evening of April 18, Huaan Xinchuang (300928. SZ) released its 2023 annual report, during the reporting period, the company achieved a total operating income of 961 million yuan, a year-on-year increase of 7.95%, and net cash flow from operating activities reached 138 million yuan, a year-on-year increase of 847.01%. As a leading enterprise in the field of intelligent cockpit in the domestic auto parts segment, Huaan Xinchuang has actively developed the intelligent cockpit screen display business in recent years.
Internally, Huaan Xinchuang has increased investment in product research and development, actively built a full-chain product production line, and externally, the company has cooperated with many mainstream domestic OEMs to jointly help the development of the intelligent cockpit field in mainland China. Taking advantage of the development of the new energy vehicle industry in the mainland, Huaan Xinchuang is gradually becoming a leading enterprise in the intelligent cockpit segmentation track of the automotive industry through the development concept of both internal and external training.
The intelligent Dongfeng of new energy vehicles drives the demand for screen displays
According to data from the China Association of Automobile Manufacturers, in 2023, affected by the dual effects of policy measures and market stimulus, the production and sales of new energy vehicles in mainland China will reach 9.587 million and 9.495 million respectively, a year-on-year increase of 35.8% and 37.9%, and the market share will reach 31.6%. Industry insiders said that the production, sales and market share of new energy vehicles continued to rise, reflecting the vigorous development of the new energy vehicle market. At the same time, it also reflects the rise of automotive intelligence in the mainland, in which the intelligent cockpit has attracted much attention from the market as the core area of new energy vehicles.
With the shift from the traditional "three major parts" to intelligence and electrification, Chinese car companies have begun to pay attention to the development of intelligent cockpits. Mainstream car manufacturers and new energy vehicle "new forces" have begun to introduce rich life scenes into new models, such as movie watching and e-sports, in order to build cars into a "third living space". As the main window for human-vehicle interaction, the screen of the intelligent cockpit is related to the intelligence, sense of science and technology and immersive experience of the automotive cockpit. Therefore, the market has put forward many requirements for in-vehicle displays, such as higher definition, more flexible, and larger size.
According to IHS Markit, a financial information company, the market penetration rate of new smart cockpits in China will exceed 75% by 2025, and the market size of China's smart cockpits will exceed 160 billion yuan by 2030. The data shows that the intelligent cockpit market has broad prospects, and also provides new development opportunities for on-board displays.
Geng Yi, chief researcher in the field of display of China Electronic Information Industry Development Research Institute, believes that following the five traditional applications, the panel application side has emerged six emerging applications represented by the vehicle display, the size of the new energy vehicle display screen is getting larger and larger, and the number of applications is increasing, and the number of display screens may develop from two screens to more than a dozen screens, "It is worth noting that the display screen and car companies have established a very close connection, and customized display will become one of the trends of subsequent development." ”
Since its inception, Huaan Xinchuang has focused on automotive display design and software system development, and has more than ten years of in-depth experience in the field of automotive electronics. At present, the company's products and services have covered intelligent cockpit display systems and domain control systems, full LCD instruments, head-up displays, electronic rearview mirrors and intelligent driving assistance systems, etc., with a wide range of applications.
Especially in the field of cockpit display, Huaan Xinchuang has advanced integrated design solutions and intelligent manufacturing capabilities by increasing its own R&D investment and integrating upstream industrial chain resources, which can meet the high standards and high requirements of domestic mainstream OEMs for the customization of on-board display components.
Meeting the high standards of customers is inseparable from the company's continuous investment in research and development. According to the 2023 annual report, Huaan Xinchuang's R&D expenses in 2023 totaled 54.8359 million yuan, an increase of 43.06% over the previous year. The specific R&D directions include the integrated product development of integrated In-cell, MiniLED and under-screen vibration, the customized development of touch display modules with "all-in-one black" technology, the customized development of high-chromaticity standard products of touch integrated display modules, and the platform development of entertainment flip screens. At the same time, in order to ensure the safety of the supply chain, Huaan Xinchuang has simultaneously carried out the localization and selection of key components of the central control front screen, and continued to increase research and development efforts to ensure the company's leading competitive position in the industry. In addition to increasing investment in R&D, Huaan Xinchuang's active layout of the construction of Nantong smart factory will also continue to help the company transform into Tier1.
The construction of the Nantong factory is progressing smoothly to accelerate the transformation of Tier1
It is understood that Huaan Xinchuang has determined the strategic goal of transforming into a Tier1 supplier since its listing. The company has established a joint venture company through cooperation with upstream panel factories and established a production base in Nantong to open up the downstream of the industrial chain. Through the strategy of upstream and downstream efforts, the company's vehicle screen display industry chain has been transformed from vertical to flat, which has also made Huaan Xinchuang a scarce target that occupies the longest chain in the industry.
With the parallel development strategy of upstream and downstream, Huaan Xinchuang has locked in upstream resources and full-chain production capacity, improved the bargaining power and stability of the supply chain, and achieved the goals of better cost, faster technology update, better quality and more reliable delivery, and accelerated the transformation to a Tier1 supplier. As of the disclosure date of the annual report, the first full-chain production line of Huaan Xinchuang Nantong production base has completed commissioning and successfully entered trial production, which is one step closer to full production.
It is reported that the total investment of Huaan Xinchuang Nantong intelligent production base project is 2 billion yuan, and the first phase investment is about 1.1 billion yuan, and the project has successfully entered the trial production stage. This is a key step taken by the company in the field of intelligent manufacturing, marking the company's strategic layout in upstream resource integration, integrated R&D and design, and full-chain production and manufacturing has been fully completed. This important progress will provide strong support for the company to build a new generation of automotive intelligent cockpit electronic product system, and bring broader market prospects and stronger competitiveness to the company.
According to the research report of Huaxin Securities, the intelligent manufacturing project of on-board LCD modules and intelligent cockpit display systems in Nantong factory is expected to produce 10 million LCD modules, 3 million sets of on-board display systems, 1 million sets of automotive intelligent cockpit systems, 500,000 sets of intelligent driving systems, and 2 million other automotive electronic products after the completion of the project, with a total output value of 5 billion yuan. After the project is put into operation, in addition to the company's overall production capacity will be greatly increased, it is expected that the penetration rate of LCD modules in China will also be significantly improved.
At the same time, due to the large investment of the company's related expenses during the construction of the production base, it is expected to have a positive impact on the company's performance as the project is completed and put into operation. Huaan Xinchuang said that in 2023, the Nantong intelligent manufacturing plant will be in the construction period, generating a large number of management expenses and R&D investment related to factory construction, and the net loss will increase year-on-year. It is expected that after the construction of the production base is completed and put into production, the company's net profit margin will also return to the high level of the industry, and the revenue will also be greatly supplemented.
It is worth mentioning that Huaan Xinchuang has carried out in-depth cooperation with many mainstream domestic car manufacturers with its excellent customization ability and excellent product strength, and its main customers include BYD, Great Wall, Geely, Changan, Chery, SAIC, Celis, Lynk & Co, Zeekr, Xiaopeng, Ideal and other mainstream car manufacturers' hot-selling models, and a total of more than 3.4 billion yuan has been added. Among them, there are 6 designated projects from domestic mainstream car manufacturers, with a total fixed amount of about 3.3 billion yuan. At the same time, the company recently received a letter of intent from SAIC-GM-Wuling, confirming that the company has obtained the qualification for the development of two display assembly products on its new energy multi-vehicle common platform.
Analysts pointed out that the signing of the cooperation project of mainstream car manufacturers shows that the company's integrated design and development, the whole chain of production and manufacturing capabilities brought by the technical and cost advantages have been recognized by the domestic head mainstream car manufacturers, and the production guarantee capacity has also been affirmed by customers. With the completion of the further construction of the Nantong plant and the gradual transformation of the fixed-point project, it is expected to have a positive impact on the company's performance.
Sigmaintell, a world-renowned industry consulting company, believes that global vehicle display panel shipments are expected to reach 210 million pieces in 2023, a year-on-year increase of about 5%, and the overall scale will still maintain a growth of 3% to 5% in the next three years. The above-mentioned analysts said that Huaan Xinchuang with the development strategy of upstream and downstream efforts to open up the whole chain of production capacity of vehicle screen display, has been recognized by a number of mainstream OEMs, with the completion of the construction of Nantong intelligent factory means that Huaan Xinchuang is following the trend, from the outsourcing of the asset-light model to the independent production model towards a new stage of industry development.