Investment Rating - The investment rating for the company is "Outperform the Market" [2][6]. Core Insights - The company reported total revenue of $4.28 billion in 2024, a year-on-year increase of 1.6%, and a net profit attributable to the parent company of $62 million, up 68% year-on-year [6]. - North America showed signs of profit recovery, with an EBITDA margin of 8.1%, an increase of 2.3 percentage points year-on-year, while the Asia-Pacific region's revenue grew by 10% [6]. - The company has secured multiple cutting-edge technology contracts, including steer-by-wire and rear-wheel steering systems, which are expected to enhance market expansion [6]. Financial Data and Forecasts - Revenue projections for 2025-2027 are $4.48 billion, $4.76 billion, and $5.11 billion respectively, with year-on-year growth rates of 4.7%, 6.2%, and 7.5% [7][9]. - Net profit forecasts for the same period are $147 million, $169 million, and $193 million, reflecting significant growth rates of 138.3%, 14.9%, and 14.0% respectively [9]. - The company’s gross margin is expected to improve from 10.5% in 2024 to 12.6% by 2027 [7]. Regional Performance - North America is projected to generate revenues of $2.24 billion in 2025, with a modest growth rate of 2% [7]. - The Asia-Pacific region is expected to see revenues rise to $1.50 billion in 2025, maintaining a robust growth rate of 12% [7]. - The Europe, Central Asia, and South America region is forecasted to have revenues of $732 million in 2025, with a slight growth of 2% [7]. Valuation and Price Target - The company is assigned a price-to-earnings (P/E) ratio of 15-17x for 2025, leading to a fair value range of HKD 6.84 to HKD 7.75 [6][8]. - The price-to-sales (P/S) ratio is estimated at 1.0-1.2x for 2025, corresponding to a fair value range of HKD 13.92 to HKD 16.70 [6][8].

Summary of Conference Call Company and Industry Involved - The conference call involves China International Capital Corporation Limited (CICC) and discusses the automotive industry, particularly focusing on electric vehicles (EVs) and steering systems. Key Points and Arguments 1. **Market Trends and Orders** - The company has set a target of $6 billion in orders for the year, which includes expectations of receiving its first order from a Chinese client for steering systems by the end of the year [3][4][5] - The penetration of electric vehicles in North America is increasing, leading to an upward adjustment in order expectations for traditional fuel vehicles [5][6] 2. **Client Contributions** - BYD contributed approximately 9% to the company's revenue in the first half of the year, indicating a strong relationship with this major client [14] - The company is actively pursuing opportunities with other clients, including Xiaomi and various domestic brands, to expand its market presence [4][16] 3. **Revenue Projections** - The company anticipates revenue growth from $1.2 billion to $1.3 billion this year, with expectations of continued growth in the following years [11][12] - Organic growth is projected to reach $1.8 billion to $2 billion, driven by both new and existing product lines [12] 4. **Challenges and Price Wars** - The company is facing challenges due to price wars, particularly from competitors like BYD, which have led to additional pricing pressures [6][12] - Despite these challenges, the company believes that the overall performance will be better than initially expected [6] 5. **North American Operations** - The company is optimizing its operations in North America, with a focus on maintaining a balance between U.S. and Mexican production [17][19] - The revenue contribution from the U.S. is approximately 55%, while Mexico accounts for about 45% [19] 6. **Supply Chain Management** - The company is working to ensure a robust supply chain by diversifying suppliers and reducing reliance on single-source suppliers [22][23] - High inflation and operational challenges are impacting the supply chain, necessitating careful management [22] 7. **Technological Developments** - The company is investing in R&D to enhance its capabilities, particularly in software integration for steering systems [31][32] - There is a focus on developing customized solutions for clients, which may lead to a more competitive edge in the market [31] 8. **Financial Outlook** - The effective tax rate has been rising, influenced by losses in North American operations and accounting for geographical income tax [34][35] - Future tax rates may see slight improvements, but overall levels are expected to remain relatively high [35] Other Important but Possibly Overlooked Content - The company is aware of the potential risks associated with the current market dynamics, including the impact of economic conditions on client orders and supply chain stability [13] - There is a strategic emphasis on maintaining a strong position in the EV market, with ongoing efforts to adapt to changing consumer preferences and technological advancements [30][32]

Core Viewpoint - DBS Research has raised the target price for Nextracker to HKD 4.5 and maintains a "Buy" rating, indicating a positive outlook for the company's stock performance [1] Group 1 - The report highlights that despite Nextracker's primary market being North America, the company is rapidly expanding its market share in China's new energy vehicle sector [1] - The improvement in business prospects has led to an upward revision of the price-to-earnings ratio, suggesting further potential for stock price appreciation [1]

Summary of Conference Call Notes Company and Industry - The discussion revolves around the automotive industry, specifically focusing on the company's performance and market dynamics in North America and Asia-Pacific regions. Key Points and Arguments Market Trends and Price Competition - The company acknowledges a cautious outlook regarding potential price wars in the automotive sector, particularly in China, due to significant impacts observed in the first half of the year [1] - There is a belief that while price competition has eased, it may resurface towards the end of the year or mid-next year, necessitating a vigilant approach [1] Order Flow and Revenue Targets - The company reported a strong order inflow in Q3, achieving $20 billion in orders, contributing to a total of $60 billion target for the year [2] - The majority of orders are from North American traditional clients, with a notable contribution from next-generation vehicle projects, although the transition to electric vehicle orders has been slower than anticipated [2][3] Regional Insights - Over half of the orders in China are from North American clients, with significant projects also coming from local private brands [4] - The company is diversifying its client base by developing projects with both European and Chinese clients, indicating a strategic focus on local market needs [4] Technological Developments - The company is optimistic about securing its first steering order from a Chinese client within the year, highlighting a shift towards prioritizing the Chinese market for technology development [5] - There is a recognition of the slow progress in the commercialization of new technologies in Europe and North America, prompting a strategic realignment towards the Chinese market [5] Financial Performance and Profit Margins - The company has experienced a decline in profit margins over the past few years, with expectations of returning to double-digit margins in the near future [8][20] - Factors affecting margins include rising costs in labor, materials, and energy, which have not been fully offset by price increases [13][15] Impact of Political and Economic Factors - The potential impact of the new U.S. administration under Trump is discussed, particularly regarding trade policies and their implications for manufacturing in North America [9][10] - The company believes that while there may be short-term disruptions, a rational resolution to trade tensions is likely, and local production strategies will help mitigate risks [12] Future Outlook - The company anticipates stable growth in North America, with expectations of reaching low double-digit growth in the coming years [32] - The European market is expected to recover gradually, with projections of reaching approximately $7.6 to $7.8 billion in revenue next year [35] R&D and Investment Strategies - The company plans to reduce R&D expenses as a percentage of revenue from 7% to 6% over the next two years, indicating a focus on efficiency [21] - There is an ongoing effort to optimize supply chain management and reduce costs, particularly in light of recent operational challenges [33] Customer Relationships and Market Positioning - The company is navigating the balance between providing comprehensive solutions and allowing clients to maintain control over software aspects of their products [29] - The competitive landscape is characterized by a shift towards modular and customizable products to meet diverse client needs [17] Other Important Content - The company is actively monitoring the evolving landscape of electric vehicles and the associated technological advancements, indicating a proactive approach to market changes [26] - There is a recognition of the need for strategic partnerships and collaborations to enhance product offerings and market reach [28] This summary encapsulates the key insights and discussions from the conference call, providing a comprehensive overview of the company's current position and future outlook in the automotive industry.

Key Points Industry and Company * **Industry**: Automotive industry, specifically focusing on EPS (Electric Power Steering) and related technologies. * **Company**: A global automotive supplier specializing in EPS and other automotive components. Core Views and Arguments * **Price War Concerns**: The company expressed caution regarding potential price wars in the industry, especially in China, due to the significant impact of the first round of price wars in the first half of the year. [1] * **Order Growth**: The company reported strong order inflow in the third quarter, bringing the total orders for the year to 60 billion USD, close to the annual target. [2] * **North American Market**: The company highlighted the importance of North American customers, particularly in the EPS and next-generation replacement business. However, the growth rate in North America may remain relatively stable. [6] * **Asia-Pacific Market**: The company expressed confidence in the sustained growth of the Asia-Pacific market, driven by the continuous increase in revenue. [6] * **Trump Administration**: The company discussed the potential impact of the incoming Trump administration on trade policies and the automotive industry, emphasizing the importance of a balanced approach and the need for a rational solution. [9-11] * **Profitability Concerns**: The company acknowledged the challenges in maintaining profitability, particularly in terms of gross margin, due to factors such as rising costs, inflation, and the impact of the pandemic. [12-16] * **Research and Development**: The company highlighted its commitment to research and development, aiming to reduce the overall R&D expenditure from 7% to 6% of revenue in the next two years. [21] * **Line Control Steering**: The company discussed the potential of line control steering technology, emphasizing the importance of software integration and collaboration with customers. [23-31] * **Regional Profitability**: The company projected different growth rates for different regions, with Europe expected to recover to a mid-single-digit level in 2023 and North America expected to reach a low double-digit level. [32] Other Important Points * **Supply Chain Management**: The company acknowledged the challenges in supply chain management and emphasized the need for continuous improvement. [33] * **Tax Reassessments**: The company discussed the impact of tax reassessments on profitability, particularly in the United States. [37] * **Share Repurchases and Dividends**: The company mentioned the possibility of share repurchases and dividends in the future, subject to board approval and shareholder considerations. [39] * **Investor Confidence**: The company expressed confidence in the current valuation and the potential for future growth, encouraging investors to continue monitoring the company's performance. [42]

[Table_MainInfo] 公司研究/汽车与零配件 证券研究报告 耐世特（1316）公司信息点评 2024 年 11 月 18 日 | --- | --- | |-------------------------------------------------------------------|------------| | 股票数据 | | | 1 [ 1 T 月 ab 1 le 5 _ 日 S 收 to 盘 c 价 k （ In 元 fo ） ] | 3.11 | | 52 周股价波动（元） | 2.29-5.46 | | 总股本（百万股） | 2510 | | 流通 A 股（百万股） | 0 | | B 股/H 股（百万股） | 2510 | | 相关研究 | | | [ 《 Ta 继 b 续 le 看 _R 好 e 亚 p 太 or 区 tI 增 nf 长 o] 潜力》 | 2024.08.16 | | 《发布激励计划》 2024.07.15 | | | 《持续看好亚太区增长潜力》 | 2024.03.29 | 市场表现 [Table_QuoteInfo] | --- | --- | --- ...

包括我们欧洲这个客户他整个平台主流平台全部要用这个所以说他在推进的话他确实速度也比较慢因为他这个比较激进的这么一个计划然后包括他的这个整个车的这个设计啊软件的整合啊所有的这个核心件的这些优化变化非常大所以说他可能在这个网店推进的时候也遇到了一些这个瓶颈整个这个平台的这个 中文字幕由Amara.org社区提供 这个订单的规模可能这个跟海外客户比的话相对会会小一些但是它这个速度会非常快所以我们相信这个这个可能这个第一个订单的这个对我们来说可能意义更更为重大就是说这个这个这个 手机款车型装配以后的话后续不管这个客户还是其他的前线客户在限控这块会有进一步的快速的装配当然也不排除目前预计装配的限控的中国客户的业务 我相信会在他下载重大的车型换代的时候会把这个项目转项装在他的车型里面去所以说我们对这个项目包括这个项目再来的后续一些新项目的拓展的计划我们还是非常有信心的这个他会公告吗还是说也不会达到公告标志 因为这个确实有些A股的公司可能就是说在一些重大规模很大的业务或者说这种比较新种业务这一块的话他会专门有一个发一个公告可能我们目前来讲的话可能这个模式不太一样就是说这个还是会通过这个季度的或者说年报发年报这种方式来做一个 ...

Key Points Introduction 1. **Industry/Company**: The call is part of a regular "招文系列" (招股说明书系列) investor conference. 2. **Core Message**: The host thanks investors for joining and expresses gratitude for their continued interest. 3. **Frequency**: The host plans to provide updates at 8:15 AM every morning. [1][2][3]

Revenue and Financial Performance - Half-year revenue of $2.1 billion, flat compared to the first half of 2023[12] - Full-year revenue for 2024 is expected to reach a record high[12] - Revenue for H1 2024 was $2.099 billion, a slight decrease of 0.1% compared to $2.102 billion in H1 2023[24] - Revenue for the first six months of 2024 was $2.1 billion, flat compared to the same period in 2023, but adjusted for unfavorable foreign exchange and reduced commodity compensation, revenue grew by 1%, outperforming the market by 120 basis points[28] - Revenue for the six months ended June 30, 2024, was $2,098.927 million, slightly down from $2,101.830 million in the same period in 2023[87] - Total revenue for the six months ended June 30, 2024, was $2,127.347 million, with North America contributing $1,151.635 million, Asia-Pacific $616.680 million, and Europe, Middle East, Africa, and South America $368.276 million[112] - Revenue from external customers for the six months ended June 30, 2024, was $2,098.927 million, compared to $2,101.830 million for the same period in 2023[112] - North America revenue decreased to $1,118,983K in H1 2024 from $1,194,519K in H1 2023, with the US contributing $664,380K (down 6.3% YoY) and Mexico contributing $454,603K (down 6.4% YoY)[117][120] - Asia-Pacific revenue increased to $594,578K in H1 2024 from $543,983K in H1 2023, driven by growth in China to $524,420K (up 12.9% YoY)[117][120] - Europe, Middle East, Africa, and South America revenue remained stable at $366,348K in H1 2024 compared to $361,149K in H1 2023, with Poland contributing $220,917K (up 9.6% YoY)[117][120] - Electric Power Steering (EPS) revenue decreased to $1,404,555K in H1 2024 from $1,442,653K in H1 2023, while Driveline (DL) revenue remained stable at $382,244K[120][121] - General Motors remained the largest customer, contributing $754,995K in H1 2024 (up 4.6% YoY), accounting for 36% of total revenue[124] Orders and Customer Projects - Customer project orders totaling $2.1 billion secured in the first half of 2024[12] - 74% from existing business, including DL and CIS business for North American truck projects[12] - 26% from new/newly acquired business, including the first DPEPS order in the Asia-Pacific region[12] - Orders from domestic Chinese automakers increased by 186% to $930 million in H1 2024 compared to H1 2023, accounting for 43% of total orders ($9 billion out of $21 billion)[13] - 38 new customer projects were successfully launched globally in H1 2024, including 18 pure electric vehicle projects and the first DPEPS project in EMEA and South America[13] - The company achieved a total order intake of $2.1 billion in the first half of 2024, with 41% from EPS product lines and 59% from driveline product lines[19] - 40% of the orders are for EV or EV/ICE shared platforms, while 60% are for ICE platforms exclusively[19] - New or newly acquired business accounted for 26% of the order intake, driving long-term above-market growth[19] - Orders from domestic Chinese OEMs surged to $930 million in H1 2024, a 186% increase compared to $325 million in H1 2023[19] - Domestic Chinese OEMs' total production increased by 20% (1.3 million units) in H1 2024 compared to H1 2023[19] - The company successfully launched 38 new customer projects in the first six months of 2024, including 18 pure EV projects, with 32 being new or newly acquired business[30] Profitability and Margins - Gross profit increased by 10.5% to $210.9 million in H1 2024 from $190.8 million in H1 2023[24] - Adjusted EBITDA rose by 6.0% to $197.3 million in H1 2024 from $186.1 million in H1 2023[24] - Adjusted EBITDA for the first six months of 2024 increased by $11.2 million or 6.0% to $197.3 million, driven by efficiency improvements and cost reductions, partially offset by unfavorable foreign exchange[28] - Gross profit increased to $210.927 million in 2024 from $190.831 million in 2023, reflecting improved margins[87] - Operating profit decreased to $41.311 million in 2024 from $46.818 million in 2023, primarily due to higher engineering and product development costs[87] - Net profit attributable to equity holders of the company was $15.695 million in 2024, a significant decline from $33.993 million in 2023[87] - Net profit attributable to equity holders decreased by $18.3 million to $15.7 million, or 0.7% of total revenue, down from $34.0 million (1.6% of total revenue) in 2023[36] - EBITDA increased by $11.2 million[37] - Raw material costs decreased by $54.2 million or 3.9%, contributing to a gross profit increase of $20.1 million or 10.5%[39][40] - The company's pre-tax profit for the six months ended June 30, 2024, was $40.790 million, compared to $45.799 million for the same period in 2023[115] - The company's basic earnings per share for the six months ended June 30, 2024, was $0.006, down from $0.014 in the same period in 2023[180] Regional Performance - The Asia-Pacific region saw strong growth, with revenue increasing by 9.3% to $594.6 million, driven by new and acquired projects, despite unfavorable foreign exchange impacts[32][33] - North America revenue decreased by 6.3% to $1.12 billion, primarily due to poor market performance of certain customer projects and the end of some projects in 2023[32][33] - Europe, Middle East, Africa, and South America revenue increased by 1.4% to $366.3 million, despite a 4.1% decline in light vehicle production in Europe, supported by new project launches[32][33] - Global light vehicle production decreased by 0.2% in the first six months of 2024, with growth in the Asia-Pacific region offset by declines in Europe, the Middle East, Africa, and South America[29] - The company's revenue was negatively impacted by $20.9 million due to unfavorable foreign exchange rates, particularly the appreciation of the USD against the RMB[31] Operational Highlights - The company has 27 manufacturing plants, including 1 non-consolidated joint venture[3] - Operates 5 technology centers and 13 customer service centers globally[3] - Serves over 60 global and domestic OEMs, including BMW, BYD, Ford, and General Motors[3] - The Porto Alegre facility in Brazil fully resumed operations by the end of July 2024 after a 30-day flood disruption[12] - The company broke ground on a new manufacturing and testing base in Changshu, China, expected to be operational by early 2025, and expanded the Mexico Technical Center, set to complete in 2026[16] - The DL business in the US underwent consolidation, resulting in a 22% increase in throughput and zero late deliveries to customers[16] - The company implemented a second round of the Early Retirement Incentive Program (ERIP) in H1 2024, expected to achieve cost savings in H2 2024[17] - A 25-acre solar power plant was commissioned at the Saginaw, Michigan facility, reducing operational costs through renewable energy[17] - The company completed 20% of the machinery relocation for the North American column business transfer to Mexico, with full completion expected by 2025[18] - The 2024 Global Supplier Conference emphasized strategic themes including dual sourcing, cost targets, faster time-to-market, ESG commitments, and digital supply chain management[18] - The company completed the modular product portfolio for EPS architectures with the launch of mPEPS, a cost-effective and scalable PEPS solution[13] - The company launched the mPEPS system, expanding its modular EPS product portfolio to include single and dual pinion systems[21] Financial Position and Cash Flow - Non-current liabilities decreased by 15.3% to $258.1 million as of June 30, 2024, compared to $304.7 million as of December 31, 2023[25] - Cash balance as of June 30, 2024, was $279.8 million, a decrease of $31.9 million from December 31, 2023, primarily due to reduced operating cash flow and increased financing activities[28] - Total assets as of June 30, 2024, amounted to $3,359.23 million, a slight decrease from $3,404.59 million at the end of 2023[83] - Non-current assets decreased to $1,814.17 million from $1,856.92 million, primarily due to reductions in property, plant, and equipment, and intangible assets[83] - Current assets remained stable at $1,545.06 million, with inventory increasing to $310.83 million and accounts receivable rising to $800.27 million[83] - Cash and cash equivalents decreased to $279.84 million from $311.74 million at the end of 2023[83] - Total equity decreased to $1,994.999 million as of June 30, 2024, compared to $2,010.841 million at the end of 2023[85] - Total liabilities decreased to $1,364.231 million in 2024 from $1,393.752 million in 2023, reflecting a reduction in non-current liabilities[85] - Exchange rate differences resulted in a loss of $25.256 million in 2024, compared to a loss of $10.086 million in 2023, impacting comprehensive income[89] - Operating cash flow for the six months ended June 30, 2024, was $152.387 million, a decrease from $231.191 million in the same period in 2023[96] - Net cash used in investing activities for the six months ended June 30, 2024, was $154.648 million, compared to $171.316 million in the same period in 2023[96] - Net cash used in financing activities for the six months ended June 30, 2024, was $19.703 million, compared to $13.857 million in the same period in 2023[96] - Cash and cash equivalents decreased by $21.964 million in the six months ended June 30, 2024, compared to an increase of $46.018 million in the same period in 2023[96] - The company's cash and cash equivalents at the end of June 30, 2024, were $279.836 million, down from $290.087 million at the end of June 30, 2023[96] Costs and Expenses - Engineering and product development costs increased by $20.6 million or 30.3%, reaching $88.6 million or 4.2% of revenue[41] - Total investment in engineering and product development decreased by $12.5 million or 8.5% to $135.4 million[42] - Selling, distribution, and administrative expenses increased by $5.1 million or 6.6% to $82.4 million, representing 3.9% of revenue[43] - Net financing costs increased to $2.2 million, up from $0.9 million in the same period last year, primarily due to short-term borrowing fluctuations[45] - Cost of sales and operating expenses totaled 2,059,040 thousand USD in the first half of 2024, slightly higher than the 2,056,312 thousand USD recorded in the same period of 2023, with increased employee costs and warranty expenses[162] - Intangible asset impairment charges surged to 37,699 thousand USD in the first half of 2024, compared to 2,371 thousand USD in the same period of 2023, reflecting higher write-downs[162] Liabilities and Provisions - Provisions for litigation, environmental liabilities, warranties, and shutdown claims decreased by $3.8 million to $83.6 million as of June 30, 2024, from $87.4 million as of December 31, 2023[48] - Total provisions decreased from 87,355 thousand USD at the beginning of 2024 to 83,600 thousand USD by June 30, 2024, primarily due to reductions in litigation and warranty provisions[153] - Warranty provisions increased by 20,226 thousand USD in the first half of 2024, reflecting higher estimated costs related to product warranties[153] - Deferred revenue decreased from 137,473 thousand USD at the end of 2023 to 123,309 thousand USD by June 30, 2024, mainly due to revenue recognition from pre-production activities[156][157] - Accounts payable decreased from 833,401 thousand USD at the end of 2023 to 810,295 thousand USD by June 30, 2024, with a notable reduction in the 0-30 days aging category from 460,109 thousand USD to 370,755 thousand USD[158][159] - Accrued expenses increased from 136,096 thousand USD at the end of 2023 to 145,601 thousand USD by June 30, 2024, driven by higher estimated customer claims due to supply chain disruptions[160] - Other net income increased to 1,424 thousand USD in the first half of 2024, compared to 1,300 thousand USD in the same period of 2023, primarily due to higher miscellaneous income[161] Shareholder and Governance Information - The company's largest shareholder, Nexteer Automotive (Hong Kong) Holdings Limited, holds 44.03% of the issued shares, totaling 1,105,000,000 shares[77] - Beijing E-Town International Investment Development Co., Ltd. holds a 20.92% stake in the company, equivalent to 525,000,000 shares[77] - M&G Plc. holds a 5.33% stake in the company, with 133,657,000 shares[77] - Directors collectively hold a minimal stake, with the highest individual holding being 0.08% by Robin Zane Milavec[74] - No directors or their immediate family members acquired any rights to purchase shares or bonds during the six months ending June 30, 2024[75] - The company's financial statements were reviewed by Deloitte, which found no material misstatements in accordance with International Accounting Standard 34[82] - The company adheres to high standards of corporate governance, including compliance with the Hong Kong Stock Exchange's corporate governance code[63] - The company's chairman also serves as the CEO, a deviation from standard corporate governance practices, but deemed necessary for consistent leadership[64] - No interim dividend was recommended for the six months ended June 30, 2024[67] - No purchase, sale, or redemption of any listed securities by the company or its subsidiaries during the six months ended June 30, 2024[68] - No options were granted under the stock option plan during the six months ended June 30, 2024[68] - The stock option plan expired on June 5, 2024, with no options available for grant as of June 30, 2024[68] - As of June 30, 2024, 8,635,250 shares could be issued under the stock option plan, representing 0.34% of the weighted average number of issued shares[71] - The company's stock price on the day before the option grant date (October 24, 2022) was HK$3.98[71] - The total number of options granted but not yet exercised as of June 30, 2024, was 83,143,610[70] - The total number of options available for exercise as of June 30, 2024, was 8,635,250[70] - The exercise price for options granted on October 25, 2022, was HK$4.268[70] - The company's total issued shares as of June 30, 2024, were 2,509,824,293[73] - The company declared a dividend of $7,529,000 for the year ended December 31, 2023, payable on July 9, 2024[183] Joint Ventures and Investments - Share of joint venture profits (losses) for Chongqing Nexteer, Dongfeng Nexteer, and CNXMotion were $1.7 million, $0, and $0 respectively for the six months ended June 30, 2024, compared to $1.9 million, ($0.2 million), and ($1.8 million) for the same period in 2023[46] - The company dissolved Dongfeng Nexteer, a joint venture with Dongfeng Motor Parts and Components Group Co., Ltd., in the six months ended June 30, 2023[187] - The company dissolved CNXMotion, a joint venture with Continental Automotive Systems, Inc., in the year ended December 31, 2023[187] - The company's investment in joint ventures had a book value of $20,097,000 as of June 30, 2024, related to Chongqing Nexteer[187] - The company's share of joint venture performance for the six months ended June 30, 2024, was $1,657,000, related to Chongqing Nexteer[187] - The company's share of joint venture performance for the six months ended June 30, 2023, was $(138,000), including $1,852,000 from Chongqing Nexteer, $(196,000) from Dongfeng Nexteer, and $(1,794,000) from CNXMotion[187] - The

Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 3.34, corresponding to a P/E ratio of 13 times for 2024 [2][4]. Core Views - The company’s revenue for H1 2024 was approximately USD 2.1 billion, showing a year-on-year growth of 1% after adjustments, outperforming the market by 1.2 percentage points [1]. - The North American market faced challenges due to reduced electric vehicle plans, while the Asia-Pacific market exhibited strong growth, with a 27.5% increase in revenue to USD 595 million [2]. - The company expects to achieve USD 6 billion in new orders for the full year and anticipates revenue growth to exceed the market by 3 percentage points [1][2]. Summary by Sections Financial Performance - H1 2024 gross margin was 10%, up 1 percentage point year-on-year, primarily due to reduced raw material costs [1]. - EBITDA increased by 6% year-on-year to USD 19.7 million, with an EBITDA margin improvement of 0.5 percentage points to 9.4% [1]. - The net profit attributable to shareholders for H1 2024 was USD 15.7 million, a decrease of 54% year-on-year, resulting in a net profit margin of 0.7% [1]. Market Dynamics - The company secured USD 2.1 billion in orders in H1 2024, with 43% coming from Chinese OEMs, nearly tripling the order size compared to the same period in 2023 [2]. - The company is expanding its product offerings in the Asia-Pacific region and has successfully obtained DPEPS orders [2]. Future Outlook - The company is optimistic about the rapid growth of the Chinese electric vehicle market and expects to maintain high growth rates in its Asia-Pacific business [2]. - The company plans to launch its first steer-by-wire technology vehicle in collaboration with a Chinese OEM by 2026, positioning itself to benefit from the increasing penetration of advanced driving technologies [2].