NJEC(SH:600699) Quan Jing Wang·2025-12-04 02:27Core Insights - Junsheng Electronics' H-shares will officially enter the Hong Kong Stock Connect on December 4, which is expected to attract more mainland investors and enhance trading activity and liquidity, leading to a potential revaluation of the company's stock in the Hong Kong market [1] - There is currently a nearly 40% premium of Junsheng Electronics' Hong Kong shares over its A-shares, indicating a disparity in market valuation, particularly regarding its robotics components business [1] - The company's dual positioning as a Tier 1 supplier in both the automotive and robotics sectors is expected to drive future growth, with a strong operational resilience demonstrated in its core automotive components business [1][2] Automotive Components Business - Junsheng Electronics' automotive components business serves as a solid foundation for its growth, benefiting from deep industry experience, a unique global layout, and improving profitability [2] - The company is the second-largest global supplier of automotive safety systems and ranks among the top suppliers of intelligent cockpit domain controllers [2] - With over 25 R&D centers and 60 production bases globally, the company has established a robust local operation model, with more than 70% of its revenue coming from overseas markets, which helps mitigate geopolitical risks [2] - The gross margin for the automotive components business reached 18.6% in Q3 2025, marking a three-year high, supported by supply chain optimization and production efficiency improvements [2] Robotics Business Development - Junsheng Electronics is strategically expanding into the robotics sector, aiming to leverage its automotive technology advantages to capture a potential market worth over $100 billion [3] - Since 2025, the company has made significant moves in the robotics field, including the establishment of a wholly-owned subsidiary and partnerships with leading robotics firms [3] - The company has developed a comprehensive solution for robotic components and has begun delivering products to notable clients, indicating strong market traction [3] Order Backlog and Revenue Visibility - The company has a robust order backlog, with over 71 billion yuan in new global orders secured in the first three quarters of 2025, including a record 40.2 billion yuan in Q3 alone [4] - The increasing proportion of orders from leading domestic brands and new energy vehicle manufacturers is a key driver of this growth [4][5] - The automotive electronics business has shown a gross margin increase of 2.2 percentage points year-on-year to 21.5% in the first half of 2025, contributing to overall margin improvement [5] Valuation and Market Position - Junsheng Electronics' current valuation presents a significant safety margin compared to industry averages, with potential for earnings elasticity from automotive safety business recovery and revenue growth from intelligent vehicle orders [5] - The transition to the Hong Kong Stock Connect is expected to shift the company's valuation logic from a traditional automotive parts supplier to an intelligent hardware platform, enhancing liquidity and addressing valuation discrepancies [5]