Core Viewpoint - The automotive industry's price-cutting trend has led to a continuous decline in valuations across the supply chain, yet savvy investors are beginning to acquire undervalued stocks, particularly in the intelligent driving sector [1] Group 1: Intelligent Driving Sector - The intelligent driving segment is a core investment theme in the automotive industry, with domestic new energy vehicle penetration exceeding 40%, but high-level intelligent driving penetration remains low, primarily at the L2 stage [1] - Companies like Xpeng and Tesla are leading the push for higher-level intelligent driving, with only a few models achieving L2+ and L3 capabilities [1] - The steer-by-wire system is a key component of high-level intelligent driving, and the global steering system leader, Nexteer (耐世特), is gaining investor interest [1] Group 2: Company Performance and Market Position - Nexteer's valuation has dropped by 7% recently but has increased by over 77% this year, driven by improved fundamentals and strong competitiveness in the steer-by-wire sector [1] - The company is strategically expanding into the steer-by-wire chassis sector to meet industry mass production demands, further enhancing its fundamentals [1] - Nexteer holds a strong position in the global automotive steering system market, ranking among the top three with a market share of 16.16% in China, second only to Bosch Huayu [2][4] Group 3: Financial Outlook - Despite being a market leader, Nexteer faces significant competitive pressure from price wars and domestic substitution in the Chinese market, with revenue growth slowing to only 1.65% in 2024 [4] - The company has a high customer concentration, with its top three clients contributing 68.8% of revenue, which poses operational risks if major clients like General Motors face performance issues [4] - In Q1 2025, Nexteer secured $800 million in new orders, a 60% year-on-year increase, with a significant rise in orders from Chinese clients, indicating strong product recognition [5][11] Group 4: Product Development and Market Trends - The steer-by-wire system is becoming mainstream as the automotive industry shifts from traditional hydraulic systems to electronic systems, with significant growth potential in the L2+ and L3 intelligent driving segments [7][10] - Nexteer's product portfolio includes traditional hydraulic and electric power steering systems, with a notable increase in orders for steering columns and intermediate shafts in 2025 [8] - The company has made breakthroughs in steer-by-wire technology, winning multiple orders from leading electric vehicle manufacturers, which positions it well for future growth [10] Group 5: Investment Sentiment - Several investment banks are optimistic about Nexteer's prospects, forecasting a compound annual growth rate of 29% in net profit from 2025 to 2027, supported by strong order growth and product diversification [11] - The intelligent driving sector remains a hot investment theme, with Nexteer's fundamentals and multiple growth drivers expected to support its market value in the long term [12]

Summary of the Conference Call for NEXTEER Company Overview - NEXTEER is benefiting from the USMCA localization advantages in North America, effectively reducing tariff impacts and maintaining a smooth cost pass-through mechanism, with major customers willing to bear additional costs, thus limiting the financial impact of tariffs [2][3][5] Key Points Industry and Market Performance - North America has seen continuous improvement in EBIT margins due to factory integration, industrial relocation, and supply chain diversification, with profits recovering as expected year-to-date [2][4] - The Asia-Pacific region is performing strongly, with China’s market growth exceeding 10%, and significant growth from major clients like BYD, Chery, and Geely [2][4] - In Q1 2025, orders reached $800 million, showing significant year-on-year growth, with overall revenue performance outpacing the market [2][4] Customer Contributions - In 2025, 40% of orders are from Chinese customers, while 60% are from overseas [2][7] - BYD is the largest local customer in Asia-Pacific, contributing 11% of revenue, with the overall contribution from Chinese customers exceeding 50% [12][16] Product Development and Innovations - NEXTEER has made progress in the Steer by Wire project, securing orders from global EV leaders and leading Chinese manufacturers, with production expected to start in 2026 [3][21] - The company is actively advancing new business directions such as rear-wheel steering and electric brake systems (EMB), with rear-wheel steering technology holding over 60% market share [3][24][28] Financial Performance and Outlook - North American EBITDA margins have recovered to double-digit levels, with confidence in maintaining this level despite potential demand uncertainties in the second half of the year [9][30] - The company aims for double-digit growth exceeding 10% for the year, with performance aligning with expectations so far [30] Trade and Tariff Impacts - The trade war and tariff policy changes primarily affect NEXTEER's North American operations, which contribute over half of total revenue [5][6] - Most products exported from Mexico to the U.S. comply with the USMCA, thus avoiding tariffs, and any tariff impacts are largely absorbed by customers [10][11] Competitive Landscape - The Chinese market is highly competitive, particularly for EPS products, with a multi-supplier model being common [14] - NEXTEER maintains a stable share with BYD, despite competitive pressures, holding a share of 25% to 30% [16] Strategic Partnerships and Future Growth - NEXTEER is collaborating with emerging players like Xiaomi, Li Auto, and XPeng, which are expected to become significant suppliers in the future [13][21] - The company is leveraging its global R&D and localized operations to respond quickly to customer needs, enhancing its competitive edge in the Chinese market [18] Challenges and Risk Management - Price wars have impacted the industry, but NEXTEER has maintained robust profitability through cost-saving measures and effective negotiations with customers [15][17] - The company is closely monitoring tariff policies and market demand fluctuations to adjust strategies accordingly [6][30] Conclusion - NEXTEER is positioned well in both North American and Asia-Pacific markets, with strong customer relationships and innovative product developments. The company is navigating challenges from trade policies and competitive pressures while aiming for sustainable growth in the coming years [2][30]

Group 1 - The automotive steering system is gradually transitioning from EPS to steer-by-wire technology, which offers better responsiveness, enhanced autonomous driving capabilities, and improved emergency steering safety [1] - The steer-by-wire system is essential for L3+ autonomous driving, with significant advancements since its first mass production application in the 2013 Infiniti Q50 [1] - The company is experiencing a recovery in its main business profitability and is building a comprehensive steer-by-wire chassis product portfolio, integrating trends such as electrification, automation, and software-defined vehicles [1] Group 2 - The company's net profit margin has significantly improved, with a projected net profit of $61.72 million in 2024, a 68.1% increase from $36.74 million in 2023 [2] - The company secured project orders totaling $6 billion in 2024, with 31% from new business, including multiple steer-by-wire orders, showcasing its strong competitiveness [2] - The company plans to strategically expand into the steer-by-wire chassis field with the release of rear-wheel steering (RWS) and electronic mechanical brake (EMB) systems in the first half of 2025, further enhancing future growth potential [2] Group 3 - The company is forecasted to achieve revenues of $4.469 billion, $4.772 billion, and $5.068 billion from FY2025 to FY2027, with year-on-year growth rates of 4.5%, 6.8%, and 6.2% respectively [2] - The projected net profit for the same period is $121 million, $162 million, and $186 million, reflecting growth rates of 96.2%, 34.1%, and 14.4% respectively [2] - Given the rapid profit growth phase, the company has a target price of HKD 7.61 per share, indicating a 24% upside potential from the current price, with a corresponding FY2025E PE of approximately 19 times [2]

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 7.61, indicating a potential upside of 24% from the current price of HKD 6.14 [1][7]. Core Insights - The automotive steering system is transitioning from Electric Power Steering (EPS) to steer-by-wire (SbW) technology, which is essential for advanced driver-assistance systems (ADAS) and is expected to enhance safety and responsiveness [5][30]. - The company is experiencing a recovery in its core profitability and is building a comprehensive product portfolio in the steer-by-wire chassis segment, capitalizing on trends in electrification, automation, and software-defined vehicles (SDV) [6][36]. - The company has secured significant project orders totaling USD 6 billion in 2024, with 31% of these being new business, showcasing its competitive strength in the market [41]. Summary by Sections Company Overview - The company is a global leader in motion control technology, providing solutions for electric and hydraulic steering systems, steer-by-wire systems, and software solutions to over 60 customers, including major automotive manufacturers [16][21]. Transition in Steering Systems - The report highlights the shift from EPS to steer-by-wire systems, which offer better responsiveness and safety features, making them a necessary choice for L3+ autonomous driving [30][31]. Recovery and Product Development - The company is enhancing its profitability through supply chain improvements and cost management, with a projected net profit of USD 61.72 million in 2024, a 68.1% increase from 2023 [6][38]. - The company is strategically expanding its steer-by-wire product offerings, including the launch of rear-wheel steering (RWS) and electronic mechanical brake (EMB) systems [52][53]. Financial Projections - Revenue forecasts for FY2025 to FY2027 are USD 4.47 billion, USD 4.77 billion, and USD 5.07 billion, respectively, with corresponding net profits of USD 121 million, USD 162 million, and USD 186 million, indicating strong growth [58][59].

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 7.61, indicating a potential upside of 24% from the current price of HKD 6.14 [5][7][58]. Core Insights - The automotive steering system is transitioning from Electric Power Steering (EPS) to steer-by-wire (SbW) technology, which offers better responsiveness and safety features essential for advanced driving assistance systems (ADAS) and L3+ autonomous driving [5][30]. - The company's profitability is recovering, supported by a robust order book and strategic expansion into the steer-by-wire product line, which positions it competitively in the evolving automotive landscape [6][58]. - The company is expected to achieve significant revenue growth, with projected revenues of USD 4.47 billion, USD 4.77 billion, and USD 5.07 billion for FY2025, FY2026, and FY2027, respectively, reflecting year-on-year growth rates of 4.5%, 6.8%, and 6.2% [7][58]. Summary by Sections Company Overview - The company is a global leader in motion control technology, providing solutions for electric and hydraulic steering systems, steer-by-wire systems, and software solutions to over 60 customers, including major automotive manufacturers [16][21]. Transition to Steer-by-Wire - The shift from EPS to steer-by-wire is driven by the increasing demand for autonomous driving capabilities, with the technology expected to enhance vehicle safety and performance [30][31]. Recovery of Core Business - The company has seen a significant recovery in profitability, with net profit for 2024 projected at USD 61.72 million, a 68.1% increase from 2023 [6][38]. - The total order volume for 2024 reached USD 6 billion, with 31% of orders being new business, showcasing the company's competitive strength [41]. Financial Projections - The company forecasts revenues of USD 4.47 billion for FY2025, with a net profit of USD 121 million, representing a 96.2% increase year-on-year [58]. - The projected net profit margins are expected to improve, with net profit margins of 2.7%, 3.4%, and 3.7% for FY2025, FY2026, and FY2027, respectively [8][58]. Strategic Product Development - The company is expanding its steer-by-wire product portfolio, including the launch of rear-wheel steering (RWS) and electronic mechanical brake (EMB) systems, which are expected to enhance vehicle performance and safety [52][53]. - The EMB system represents a significant advancement in brake technology, replacing hydraulic systems with electronic controls for improved precision and integration [52]. Market Position and Competitive Advantage - The company maintains a strong market position in China, with a 16.16% market share in the EPS segment, ranking second in the domestic market [29]. - The strategic focus on software-defined vehicles (SDV) and collaboration with manufacturers enhances the company's ability to meet evolving market demands [36][37].

1 Copyrights 2025, Nexteer Automotive Corporation. All rights reserved. 15 May 2025 Copyrights 2025, Nexteer Automotive Corporation. All rights reserved. Safe Harbor Statement These materials have been prepared by Nexteer Automotive Group Limited ("Nexteer" or the "Company") and are being furnished to you solely for informational purposes. The information contained in these materials has not been independently verified. NO REPRESENTATION OR WARRANTY EXPRESS OR IMPLIED IS MADE AS TO, AND NO RELIANCE SHOULD B ...

Key Points Summary of the Conference Call Company Overview - The conference call discusses the performance and strategies of **Nexteer Automotive** in the automotive industry, particularly focusing on electric vehicle (EV) related projects and market dynamics in North America and the Asia-Pacific region. Core Insights and Arguments - **Order Growth**: In Q1 2025, Nexteer secured **$800 million** in orders, a significant increase from **$500 million** in the same period last year, with **40%** of these orders coming from Chinese clients, primarily for EV-related projects such as REPS, RWS, and dual pinion EPS [2][4]. - **North American Market Strategy**: The company regained a column business from one of the "Big Three" automakers in Detroit, planning to shift production from the U.S. to Mexico to leverage cost advantages and solidify its market position [2][5]. - **Annual Order Target**: Nexteer set an annual order target of **$5 billion**, with EPS business expected to account for approximately **70%** of total orders. Continuous inflow of orders related to steer-by-wire and electronic mechanical brakes (EMB) is anticipated for the remainder of the year [2][6][11]. - **Revenue Contribution**: The North American market contributed about **$2.2 billion** in revenue, with most products meeting USMCA tariff exemption conditions. The company is actively managing additional costs through negotiations with clients [2][8]. - **Asia-Pacific Performance**: The Asia-Pacific region has shown exceptional performance, with revenue growth significantly outpacing the market. The domestic revenue share is expected to reach **35% to 40%** in the medium term [2][10][14]. Additional Important Insights - **Profitability Goals**: Nexteer aims for an operating profit margin of **10%** in the Asia-Pacific region, with similar efforts in Europe and North America. The effective tax rate is projected to stabilize between **20% and 30%** in the coming years [3][20][24]. - **New Projects**: The company launched **23 new projects** in Q1 2025, primarily in second and third-tier cities in the Asia-Pacific region, continuing the momentum from 2024 [4]. - **Technological Capabilities**: Nexteer possesses independent design and manufacturing capabilities for steer-by-wire and brake-by-wire systems, sharing intellectual property with Continental Automotive [7]. - **Tariff Impact**: While tariffs on steel and aluminum began to affect the industry in March and April, the overall impact on profitability in North America has been limited thus far. The company will continue to monitor the effects of U.S.-China trade agreements on its supply chain [9][10]. - **Future Order Expectations**: The company anticipates a steady increase in orders for steer-by-wire and EMB technologies, with significant growth expected in 2026 as new vehicles begin to adopt these solutions [13][26]. Regional Profitability and Trends - **Profit Margins**: The Asia-Pacific region is expected to maintain a profit margin of around **17%**, while North America is projected to recover to low double digits as operational efficiencies improve [15][20]. - **Capital Expenditure**: Nexteer plans to keep capital expenditures within **4%** of revenue, focusing on new projects in the Asia-Pacific region while maintaining a conservative approach in Europe [23]. - **Tax Incentives**: Tax incentives in regions like China and Poland may help lower the overall effective tax rate to around **20%** or below [25]. This summary encapsulates the key points from the conference call, highlighting Nexteer's strategic focus, market performance, and future outlook in the automotive industry.

Core Viewpoint - Nexteer launched 23 new projects in Q1 2025, with 60.9% focused on new energy vehicles (NEVs), driven by strong demand from Chinese NEV OEMs and significant bookings from North American clients [1] Group 1: Business Performance - The Company secured bookings totaling US$0.8 billion in Q1 2025, representing 16.0% of its full-year target of US$5.0 billion [1] - New energy vehicle projects accounted for 14 out of 23 new projects, highlighting the Company's focus on this sector [1] - The Company is actively developing new products, including Electro-Mechanical Braking (EMB) and enhancing its Rear Wheel Steering (RWS) systems [1] Group 2: Market Environment - The Company is facing manageable impacts from US tariffs, primarily affecting parts and raw materials from Canada and Mexico, with a 25% tariff on non-compliant automobile parts [1] - Most products exported from Mexico to the U.S. comply with USMCA, allowing them to maintain tariff-free status [1] - The Company is optimizing its supply chain and manufacturing strategies to mitigate market uncertainties and policy risks [1] Group 3: Regulatory Developments - The Trump administration plans to relax regulations on autonomous driving, which will benefit Nexteer's autonomous driving-related business, particularly in high-capacity EPS and advanced SBW and RWS business units [2] - The relaxation of compliance procedures for self-driving vehicles for non-commercial purposes is expected to further support the development of autonomous driving in the U.S. [2] Group 4: Investment Outlook - The Company maintains a "Buy" investment rating with a target price of HK$6.50 per share, reflecting a 15.6x 2025 PER [2]

Nexteer Automotive Group (01316) Q1 2025 Earnings Call May 15, 2025 08:00 AM ET Company Participants Tony Wang - Investor Relations DirectorRobin Milavec - President, CTO, Chief Strategy Officer & Executive DirectorMike Bierlein - SVP & CFORebecca Wen - Executive Director Operator Ladies and gentlemen, welcome to the NexTier Automotive Group Limited twenty twenty five First Quarter Investor Communication Call. All participants will be in listen only mode. After today's presentation, there will be an opportu ...

Financial Data and Key Metrics Changes - In Q1 2025, the company achieved record bookings of $800 million and forecasts total bookings of $5 billion for the full year [12][22] - North America operations generated $2.2 billion in revenue during 2024, with $1.3 billion from U.S. operations and $900 million from Mexico operations [19] Business Line Data and Key Metrics Changes - The company launched 23 new programs in Q1 2025, including 14 for battery electric vehicle platforms and 19 for new or conquest business [8] - Electric powered steering accounted for 36% of new business bookings, while columns accounted for 45% [12] Market Data and Key Metrics Changes - Nearly 40% of total bookings are from China OEMs, indicating alignment with growth megatrends in China [12] - The company is experiencing strong demand for by-wire technology, particularly in the China market [24] Company Strategy and Development Direction - The company is focused on expanding its motion by wire technology, which includes steer by wire and brake by wire systems, to enhance precision and efficiency in EV platforms [15][23] - The strategy includes reducing fixed costs, optimizing footprint, and improving supply chain efficiency to drive margin expansion [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing challenges such as a dynamic tariff environment and supply chain restrictions but remains optimistic about strong customer schedules and revenue growth [6][30] - The company is well-positioned to navigate tariff impacts and is actively working with customers to mitigate costs [22] Other Important Information - The company successfully resecured an important column business with a North American customer, which had been lost to a competitor [11] - The company expects to start production of rear wheel steering contracts with leading Chinese OEMs in 2026 [14] Q&A Session Summary Question: Updates on the latest trend in the North America market - Management noted that year-to-date volumes in North America are performing according to expectations, with strong customer schedules [27][30] Question: Changes in customer order trends due to new tariffs - Management indicated that customer production schedules remain strong and have not changed significantly due to the new tariffs [31] Question: Clarification on USMCA tariff compliance - Management confirmed that for USMCA compliant shipments, there is no tariff if 75% of content comes from North America; otherwise, a 25% tariff applies [33][34]