Trademark 3840-480

Huayi Technology (688071): domestic automotive powertrain test leader New Energy + IMU opens new growth space

Domestic automotive powertrain testing leader with steady growth

      Founded in 1998 and listed on the SSE Science and Technology Board in 2021, HAYTECH is a high-tech enterprise focusing on the development of automotive powertrain intelligent testing technology, mainly engaged in the research and development, design, manufacture, sales and provision of related testing services of automotive powertrain intelligent testing equipment. At present, it has formed five major equipment systems: engine intelligent testing equipment, transmission testing equipment, turbocharger testing equipment, water and oil pump assembly and testing equipment, and new energy vehicle powertrain testing equipment. At the same time, we provide testing services for downstream customers' powertrain product development and design, and provide engineering testing and analysis verification for the performance, function, quality and development improvement of automotive assemblies.

      Deeply engaged in the industry for more than two decades, the company has obvious advantages in technology and experience, and is a leading domestic automotive powertrain testing company with downstream customers including SAIC, Great Wall, GAC, Changan, FAW, Dongfeng, Foton, JAC, BYD, Siemens, Caterpillar and other well-known domestic and international automotive companies and auto parts suppliers. With its market position, the company's performance has grown steadily, with revenue growing from RMB 0.99 billion in 2017 to RMB 312 million in 2021, with a CAGR of approximately 34.19%, and corresponding attributable net profit also growing from RMB 0.03 billion to RMB 0.58 billion, with a CAGR of approximately 109.69%.

      Break the monopoly of foreign technology, fully benefit from domestic substitution

      In the continued rise in car ownership, used car market improvement and car networking development and other multi-factors, the market size of China's automotive testing industry in 2020 is about 54.042 billion yuan, is expected to reach 85.1 billion yuan in 2025, CAGR of 9.5%, the future development prospects are better. China's powertrain testing equipment industry started late and has long relied on foreign technology. Homegrown test equipment lags behind developed countries in Europe and the United States in terms of performance and precision, and most local manufacturers focus on the low-end market, while the market for mid- and high-end equipment has long been monopolized by AVL, ThyssenKrupp and other manufacturers, and there is huge space for domestic substitution. Compared with the traditional hot test technology, cold test technology has more outstanding advantages in terms of economic benefits, environmental benefits and test stability, and is gradually replacing the hot test as the mainstream testing method for engine inspection. 2003, Huyi Technology successfully developed the first engine cold test equipment independently and delivered it to SAIC GM, filling the vacancy of domestic engine cold test equipment. In the field of testing equipment, the company has the ability to compete with international giants, and benefits from localized after-sales service and customized installation and commissioning, downstream automobile and engine manufacturers increasingly favor localized cold test equipment providers, and the company is expected to fully benefit from the increase in penetration of domestic equipment.

      Ramping up new energy vehicles and smart driving to open up new growth space For new energy vehicles, the company has expanded horizontally to new energy vehicles by virtue of its own advantages in testing equipment and testing services in the field of fuel vehicles: 1) The company has actively expanded its self-built laboratories to improve the quality of its own service supply, and currently the company has built more than 50 professional laboratories covering the field of pure electric and hybrid vehicles. 2) The company has independently developed and We have successfully developed a 20,000rpm, 500Nm torque motor and reducer test stand, which has been provided to mainland China for investment.

      (3) In 2022, the company passed the inspection and testing organization filing audit of the Equipment Industry Development Center of Industry and Information Technology, becoming an authorized testing organization for the parts part of the "Inspection and Testing Organization Filing Information (Batch 5)", expanding the testing qualification in the field of new energy vehicles and filling the gap in the announcement of inspection and testing qualification in the field of new energy vehicles.

      Intelligent driving, the company established the Intelligent Driving Division, forward-looking layout of intelligent driving: inertial navigation system (INS) of high-precision positioning will become an integral part of L3 and above levels of autonomous driving technology, the global market space of more than 100 billion U.S. dollars in 2025. The company's IMU has completed testing and validation, and has cooperated deeply with SAIC's forward-looking technology research department, and the relevant products have entered the matching stage with the OEM. The company's layout in the field of new energy vehicles and intelligent driving will open up new growth space for the company's future development.

      Profit Forecast

      We are optimistic about the company's leading edge in automotive powertrain testing and business layout in the field of new energy vehicles and intelligent driving, forecast the company's 2022-2024 net profit attributable to 0.70, 122, 167 million yuan, EPS 0.96, 1.67, 2.30 yuan, the current share price corresponds to PE 64, 37, 27 times, the first coverage, given First coverage, give "Recommended" investment rating.

      Risk Warning

      Risk of macroeconomic downturn, less-than-expected R&D results, less-than-expected smart driving penetration, less-than-expected new energy vehicle sales, less-than-expected auto industry boom.

News Citation.