Summary of Xingyu Co., Ltd. Conference Call Company Overview - Xingyu Co., Ltd. benefits significantly from the sales growth of Chery Group, which accounts for 60%-70% of its revenue. The performance of Chery is expected to enhance Xingyu's earnings, especially in the second half of the year due to Chery's Hong Kong listing and supply chain optimization [2][9]. Key Points Sales and Revenue Contributions - The delivery volume of the Seres M8 model is expected to significantly contribute to Xingyu's revenue and profit in Q3, with monthly sales of approximately 20,000 units for M8 and 10,000 units for M9. Future upgrades to M9 may include colored GIP headlights, which could further enhance unit value and drive performance growth [2][10]. - In Q3, the company anticipates a growth rate exceeding 30%, showing improvement compared to Q2. Chery's sales in July and August reached approximately 230,000 and 240,000 units, respectively, marking a year-on-year increase of about 15% [2][8]. Strategic Partnerships - Xingyu has established a close partnership with North American clients, providing exclusive tail lights for SUV models produced in its Shanghai factory. This collaboration is expected to deepen, with significant orders from brands like BMW and Skoda, indicating strong demand growth from its Serbia factory starting in the second half of 2026 [4][12]. - The company has secured around 50 new projects in the first half of 2025, including orders from Chery, Geely, Volkswagen, BMW, Huawei, and Li Auto, which will support ongoing product structure optimization [4][13]. Technological and Production Capabilities - Xingyu possesses significant advantages in injection molding technology, with large tonnage die-casting machines (3,000 tons and 4,000 tons) enabling the production of large automotive lighting products. This positions the company as a leader in the industry [6]. - The company has strong R&D capabilities in the smart headlight sector, having accumulated a skilled team in controller development, allowing it to create advanced products like ADB and DRP headlights [7]. Market Position and Future Outlook - Xingyu is currently a leading player in the domestic automotive lighting market, holding approximately 17% market share, with a goal to increase this to around 25%. The domestic market for headlights is estimated at 80 billion RMB, with tail lights also representing a significant market opportunity [14]. - The company is expected to maintain high growth in revenue and profit, driven by overseas market expansion and potential developments in the robotics sector. Despite a relatively low valuation compared to tech peers, Xingyu's future profit potential remains flexible, suggesting a positive outlook [15]. Additional Insights - The company is actively exploring other overseas market collaborations, indicating a strategic focus on international expansion [5]. - Xingyu's production capacity is currently operating at near full capacity, with some smaller injection molding components outsourced to ensure efficiency and quality [11].

Investment Rating - The report maintains a "Buy" rating for the company [4] Core Views - The company achieved a revenue of 13.25 billion yuan in 2024, representing a year-on-year increase of 29.32%, with a net profit of 1.408 billion yuan, up 27.78% year-on-year [1] - The average selling price of automotive lights increased from 162 yuan to 203 yuan, contributing to a sales revenue of 12.45 billion yuan for lighting products, which is a 29.8% increase year-on-year [7] - The company is a leading manufacturer and designer of automotive lighting systems in China, serving a wide range of domestic and international automotive manufacturers [2] Financial Summary - The projected revenues for 2025, 2026, and 2027 are 16.62 billion yuan, 20.07 billion yuan, and 22.12 billion yuan, respectively, with year-on-year growth rates of 25.4%, 20.8%, and 10.2% [3] - The expected net profits for the same years are 1.85 billion yuan, 2.30 billion yuan, and 2.66 billion yuan, with corresponding year-on-year growth rates of 31.3%, 24.6%, and 15.3% [3] - The company’s sales and management expenses have decreased, with sales expense ratio at 0.42%, management expense ratio at 2.29%, and R&D expense ratio at 4.95% [1] Product and Market Development - The company is expanding its production capacity with the construction of a smart manufacturing industrial park, which will enhance its ability to produce electric vehicle lighting products [2] - The company has undertaken 69 new model R&D projects in 2024, successfully launching 40 models into production [7] - Domestic revenue reached 12.04 billion yuan, a 29.2% increase year-on-year, while international revenue grew by 49.1% to 499 million yuan [7]