Xingyu Co.,Ltd(SH:601799) Tianfeng Securities·2024-08-09 00:30Investment Rating - The report initiates coverage with a rating of "Buy" for the company [4]. Core Views - The company is a leading manufacturer in the automotive lighting industry, with a steady increase in market share from 6% in 2018 to 14% in 2021, driven by the acceleration of LED penetration and the rise of intelligent lighting applications [1][11]. - The shift towards smart lighting and domestic alternatives is reshaping the industry, with increasing vehicle value per unit as the demand for interactive and design-oriented lighting grows [1][28]. - The company's core clients are transitioning to new energy vehicles, which is expected to drive revenue growth alongside global expansion efforts [1][20]. - Continuous product upgrades are leading to an increase in average selling price (ASP), with significant advancements in lighting technology [1][31]. Summary by Sections Company Overview - Established in 1993, the company has focused on the automotive lighting sector, developing a comprehensive R&D system and a wide range of products including headlights, taillights, fog lights, and ambient lights [1][16]. - The company has maintained a revenue share of over 85% from automotive lighting since 2011, indicating a strong focus on its core business [16]. Industry Trends - The automotive lighting industry is experiencing a shift towards smart and interactive lighting solutions, with LED technology becoming mainstream [31][35]. - The penetration rate of LED headlights has increased significantly from 20.23% in 2017 to 64.25% by the end of 2022, indicating a strong growth trajectory [31][33]. - The demand for intelligent lighting systems is expected to rise as the automotive industry moves towards electrification and automation [35][43]. Product and Customer Upgrades - The company is enhancing its product offerings and customer base, with a focus on new energy vehicles and global market expansion [1][20]. - The ASP of lighting products is expected to rise due to continuous upgrades and the introduction of high-value products [1][22]. - The company has established a strong presence in the supply chains of major automotive brands, including both traditional and new energy vehicle manufacturers [20][18]. Financial Projections - The company is projected to achieve net profits of 1.48 billion, 1.90 billion, and 2.30 billion yuan for the years 2024, 2025, and 2026 respectively, with corresponding P/E ratios of 24, 19, and 15 times [2][4]. - The report anticipates that the combination of revenue growth from new energy vehicle clients and product upgrades will enhance profit margins [2][22].