20220218-华泰金融控股-立讯精密-002475.SZ-Joining_hands_with_Chery_to_foray_into_auto_business_6页_603kb

Summary of Luxshare Precision Industry's Strategic Move into Auto Business

Core Content

Luxshare Precision Industry has made a strategic move into the auto business by signing a Strategic Cooperation Framework Agreement with Chery Group. This partnership includes the acquisition of equity stakes in Chery Holdings, Chery Auto, and Chery New Energy, as well as the establishment of a joint venture (JV) focused on the R&D and manufacturing of new energy vehicles (NEVs).

Main Points

• Equity Acquisition: Luxshare's parent company acquired 19.9% of Chery Holdings, 7.9% of Chery Auto, and 6.2% of Chery New Energy for a total of RMB10.1bn.
• Joint Venture: Luxshare holds a 30% stake in the JV with Chery Group, aiming to enhance its capabilities in core auto parts and vehicle manufacturing.
• Chery's Strengths: Chery has a strong presence in the high-end auto market, having sold over 100k NEVs in 2021, and possesses a robust R&D system and independent platform.
• Strategic Alignment: The move aligns with Luxshare's strategy of expanding into components, modules, and ODM, similar to its approach with Apple and other smartphone makers.
• Future Prospects: The auto business is expected to become a new growth driver for Luxshare, given the increasing involvement of tech giants in the automotive sector.
• Financial Projections: Net profit estimates for Luxshare are maintained at RMB8.46bn (2021E), RMB11.99bn (2022E), and RMB14.96bn (2023E). The target price is set at RMB45.95, with a valuation based on a 27x 2022E PE, higher than the industry average of 17x.
• Risks: Potential risks include weaker-than-expected AirPods sales and a decline in global 3C demand due to the ongoing impact of the pandemic.

Key Financial Information

Revenue (RMBmn)

• 2019: 62,516
• 2020: 92,501
• 2021E: 127,144
• 2022E: 167,495
• 2023E: 212,707

Net Profit (RMBmn)

• 2019: 4,714
• 2020: 7,225
• 2021E: 8,464
• 2022E: 11,988
• 2023E: 14,960

EPS (diluted, RMB)

• 2019: 0.67
• 2020: 1.03
• 2021E: 1.20
• 2022E: 1.70
• 2023E: 2.12

PE (x)

• 2019: 61.38
• 2020: 40.04
• 2021E: 34.18
• 2022E: 24.14
• 2023E: 19.34

PB (x)

• 2019: 14.26
• 2020: 10.30
• 2021E: 7.34
• 2022E: 5.63
• 2023E: 4.36

EV EBITDA (x)

• 2019: 0.08
• 2020: 0.18
• 2021E: 25.18
• 2022E: 16.99
• 2023E: 13.20

Investment Rating

• Rating: BUY
• Target Price: RMB45.95
• Potential Upside: 12%

Share Performance

• Closing Price (11 Feb): RMB41.05
• 52-Week Price Range: RMB32.40–51.00
• Market Cap (RMBmn): 290,278
• 6-Month Avg Daily Valuation (RMBmn): 2,611
• BVPS (RMB): 4.63

Analysts

• HUANG Leping, PhD
  • SAC No.: S0570521050001
  • SFC No.: AUZ066
• CHEN Xudong
  • SAC No.: S0570521070004
  • SFC No.: BPH392
• HUANG Liyue
  • SAC No.: S0570121070191
  • SFC No.: BRH099

Key Data

Financial Highlights

• Growth Rates: Revenue is projected to grow steadily, with a 31.74% increase in 2022E and 26.99% in 2023E.
• Profitability: ROE is expected to remain around 22.69% in 2022E and 22.29% in 2023E, indicating strong returns on equity.
• Solvency: The company maintains a healthy current ratio and quick ratio, suggesting good short-term liquidity.

Conclusion

Luxshare's strategic collaboration with Chery is aimed at enhancing its position in the auto industry, particularly in core components and NEV manufacturing. This move is expected to strengthen its capabilities and open new growth avenues, positioning it well for long-term success. The investment rating remains BUY with a target price of RMB45.95, reflecting confidence in its future performance despite potential risks.