Core Viewpoint - The company, China Automotive Research (中国汽研), is positioned as a leading automotive technology research and service platform in China, focusing on intelligent connected vehicles to drive revenue growth. The company achieved a revenue of 4.697 billion yuan in 2024, representing a year-on-year growth of 14.65%, with a net profit of 908 million yuan, up 8.56% year-on-year. The automotive technology service business revenue share increased to 87.82%, with a significant growth of 42.86% in the new energy and intelligent connected vehicle development and testing business [1][2][5]. Group 1: Company Overview - China Automotive Research is one of the six fully licensed automotive testing institutions in China, holding a leading market share. The company has a history dating back to 1965 and has undergone several transformations, including its listing on the Shanghai Stock Exchange in 2012 and its integration into the China Inspection and Certification Group in 2023 [12][15][16]. - The company has established multiple national-level research and testing platforms, focusing on safety, green technology, and user experience, aiming to become a technology platform company centered on standards [12][15]. Group 2: Financial Analysis - The company's core business has shown stable growth, with a projected revenue of 5.47 billion yuan in 2025 and an increase in revenue forecasts for 2026 and 2027 to 7 billion and 8.39 billion yuan, respectively. The net profit for 2025 is expected to be 1.11 billion yuan, with subsequent years also showing growth [5][26]. - The company has a robust asset base with ongoing construction projects, including a headquarters base in East China with an investment exceeding 2.3 billion yuan, expected to be operational by the end of 2025 [31][35]. Group 3: Industry Trends - The Ministry of Industry and Information Technology (MIIT) and the State Administration for Market Regulation have initiated policies to standardize the management of intelligent connected vehicle products, which is expected to expand the market for mandatory testing by 50% [2][96]. - The intelligent connected vehicle testing industry is transitioning from policy-driven to market-driven, with significant investments from leading testing institutions like China Automotive Research and the China Automotive Center [90][94]. Group 4: Testing and Certification - The company has developed the world's first third-party evaluation system for intelligent connected vehicles, IVISTA, and continues to update it. In 2024, it released the first L2+ urban road navigation intelligent driving evaluation regulations [3][70]. - The establishment of testing facilities is crucial for the industry, with the company investing in multiple testing sites across key automotive industry clusters in China, enhancing its capacity to meet the growing demand for intelligent connected vehicle testing [21][94].

Investment Rating - The report maintains a "Buy" rating for the company [3] Core Views - The implementation of L2 national standards is expected to significantly boost the company's performance, with revenue forecasts for 2025 set at 5.47 billion yuan, and increased projections for 2026 and 2027 to 7.00 billion and 8.39 billion yuan respectively, reflecting year-on-year growth rates of 17% and 28% [3] - The company is positioned as a leading player in the automotive testing industry, focusing on technical services driven by smart and connected vehicles, with a revenue share from automotive technical services expected to rise to 87.82% in 2024 [8][14] - The company has established a comprehensive testing and evaluation system for smart and connected vehicles, which is crucial for gaining industry pricing power [8][59] Summary by Sections Financial Forecasts and Investment Rating - The company is projected to achieve total revenue of 4.70 billion yuan in 2024, with a year-on-year growth of 14.65%, and a net profit of 907.78 million yuan, reflecting an 8.56% increase [3] - The report anticipates a steady increase in net profit, with estimates of 1.11 billion yuan for 2025, 1.39 billion yuan for 2026, and 1.72 billion yuan for 2027, corresponding to year-on-year growth rates of 22.67%, 25.14%, and 23.21% respectively [3] Industry Overview - The automotive testing industry is undergoing a transformation with the introduction of mandatory testing for smart and connected vehicles, which is expected to expand the market by 50% [8][56] - The company has invested over 2.3 billion yuan in its East China headquarters, which is set to commence operations by the end of 2025, enhancing its capacity to meet the demands of mandatory testing [8][24] Company Development and Strategy - The company has a rich history as a third-party automotive testing leader, established in 1965, and has undergone several transformations to enhance its capabilities [14][15] - The company is actively expanding its international presence and has formed partnerships with various organizations to promote standard recognition and market development [25]