Summary of Xingyu Co., Ltd. Conference Call Company Overview - **Company**: Xingyu Co., Ltd. - **Industry**: Automotive Lighting Key Points and Arguments Historical Performance (2007-2011) - Net profit increased from 50 million CNY to 150 million CNY, with net profit margin rising from 13% to over 15% due to increased project contributions and cost reduction efforts [2][3] - Significant capital expenditure post-IPO in 2010, focusing on a project with an annual capacity of 1 million sets of car lights [2][3] - Major clients included FAW-Volkswagen, SAIC Volkswagen, and Toyota, while Chery's revenue contribution decreased [2][4] Development Phase (2012-2016) - Revenue grew at a compound annual growth rate (CAGR) of 26%, surpassing industry average, despite a decline in gross margin from 25.93% to 20.98% due to product price drops and rising costs [2][5] - Capital expenditure averaged over 200 million CNY annually, with investments in multiple LED lighting projects [2][5] - Market share increased from 6.22% in 2011 to 8.91% in 2017, with a focus on enhancing production capacity for major clients [2][5] Golden Era (2017-2020) - Revenue surged from 3.347 billion CNY to 7.323 billion CNY, with a CAGR of 21.62% and gross margin improving from 20.98% to 27.30% [2][6] - Significant capital expenditure increased to 600-800 million CNY annually, with new facilities established [2][6] - Market share rose to 13.6%, and average product price increased to 103.72 CNY per unit [2][6] New Energy Cycle (2021-2024) - Revenue projected to grow from 7.3 billion CNY to 13.2 billion CNY, with a CAGR of 16% [2][7] - Gross margin expected to decline to around 19% due to accounting changes and intensified competition, yet net profit continues to grow [2][8] - Market share increased to over 16%, with a shift in customer base towards domestic and new energy vehicle manufacturers [2][8] Technological Advancements - R&D investment rose from 179 million CNY in 2017 to over 300 million CNY in 2020, representing about 4% of revenue [2][9] - Successful development of advanced lighting technologies, including ADB headlights and pixel headlights, leading to increased product prices [2][9] Customer Structure Changes - Transition towards a customer base dominated by domestic brands and new energy vehicle companies, with major clients shifting from joint ventures to companies like Chery and Li Auto by 2024 [2][10] Future Market Outlook - The domestic automotive lighting market is expected to grow from 91.9 billion CNY in 2024 to 140.2 billion CNY by 2028, with a growth rate exceeding 10% [2][15] - Xingyu is well-positioned to benefit from the trend of market concentration towards leading companies [2][15] Investment Rating and Profit Forecast - Projected net profits for 2025, 2026, and 2027 are 1.686 billion CNY, 2.126 billion CNY, and 2.632 billion CNY respectively [2][17] - Maintaining a "buy" rating with a projected P/E ratio of 22 for 2025, indicating favorable investment value [2][17] Additional Important Insights - Continuous high R&D investment to strengthen competitive edge in smart lighting technology [2][11] - Strategic partnerships with leading clients such as Huawei, Chery, and Li Auto, enhancing market positioning [2][16]

Core Viewpoint - Xingyu Co., Ltd. has demonstrated excellent growth in revenue and profit since its listing, establishing itself as a leading independent automotive lighting company through customer expansion and product upgrades [1] Group 1: Growth Phases - The growth of Xingyu can be divided into four phases: late sedan cycle (2007-2011), early SUV cycle (2012-2016), late SUV cycle (2017-2020), and new energy cycle (2021-2025) [1][2][3] - In the late sedan cycle, Xingyu's revenue and profitability increased, driven primarily by major customers such as Volkswagen and Toyota [1] - During the early SUV cycle, revenue growth remained stable, but profitability faced pressure due to customer price reductions and rising costs [2] - In the late SUV cycle, Xingyu benefited from both product and customer cycles, with revenue and profit growth outpacing revenue growth due to LED upgrades [2] - The new energy cycle has seen a shift in the domestic passenger car market, with a slowdown in revenue growth in 2021-2022, but a return to growth expected in 2023-2024 [2] Group 2: Profitability and Customer Structure - Compared to the peak net profit margin during the LED boom in 2019-2020, the company's net profit margin has stabilized despite a slight decline in recent years [3] - The customer structure has shifted from primarily joint ventures to domestic brands such as Chery and Li Auto, benefiting from increased sales [3] Group 3: Future Outlook - The smart lighting cycle (2026-2030) is expected to drive continuous upgrades in automotive lighting, increasing average selling prices (ASP) and industry growth [3] - Xingyu's competitive position has strengthened due to high barriers to entry in the lighting industry, with deep partnerships with leading clients in the new energy sector [3] - The company is actively expanding into overseas markets, which is anticipated to contribute to additional revenue growth [3] Group 4: Profit Forecast - The projected net profits for Xingyu from 2025 to 2027 are 1.759 billion, 2.199 billion, and 2.698 billion yuan, with corresponding EPS of 6.16, 7.70, and 9.44 yuan [3]