Investment Rating - The report maintains a "Buy" rating for the company with a target price of 85.72 CNY [7][8] Core Views - The company experienced significant revenue growth in its electronic business, with a 2024 revenue of 5.541 billion CNY, representing an 18.46% year-over-year increase. However, it reported a net loss of 550 million CNY, which is higher than the previous year's loss of 217 million CNY, primarily due to a decline in gross margin and increased operating expenses [1][2] - The company is expected to benefit from its comprehensive automotive electronic business model, which includes partnerships with major domestic automakers and ongoing international orders, leading to a gradual turnaround in profitability as it scales its operations [1][3] Summary by Sections Financial Performance - In 2024, the automotive electronics business generated 4.406 billion CNY in revenue, up 28.89% year-over-year, with a stable gross margin of 19.4%. However, the R&D services and solutions segment saw a revenue decline of 14.02% to 1.060 billion CNY, with a gross margin drop of 9.8 percentage points to 31.9% [2][4] - The company’s revenue for Q1 2025 reached 1.328 billion CNY, a 49.34% increase year-over-year, while the net loss narrowed to 120 million CNY from 192 million CNY in the same period last year [1][2] Future Outlook - The company plans to enhance its product offerings through a combination of distributed electronic control units and integrated L4 products. It has established collaborations with major domestic manufacturers and is expanding its global supply chain with new facilities in Germany and Malaysia [3][4] - Revenue projections for 2025 and 2026 have been slightly adjusted upward to 7.293 billion CNY and 9.123 billion CNY, respectively, reflecting increased project collaborations. However, gross margin expectations have been lowered due to competitive pressures [4][13] Valuation - The target price of 85.72 CNY is based on a sum-of-the-parts (SOTP) valuation method, with hardware and software business net profits projected at 1.9 billion CNY and 1.1 billion CNY for 2026, respectively. The valuation reflects a premium over comparable companies [4][13]