Desay SV(002920)2025-03-18 05:47Summary of Huizhou Desay SV Automotive Co Ltd Conference Call Company Overview - Company: Huizhou Desay SV Automotive Co Ltd - Industry: China Autos & Shared Mobility - Stock Ticker: 002920.SZ - Market Cap: Rmb68,527 million - Current Stock Price: Rmb124.00 - Price Target: Rmb160.00, indicating a 29% upside potential Key Financial Results - 4Q24 Earnings: Reported earnings grew 2% YoY to Rmb598 million, but recurring earnings fell 18% YoY to Rmb497 million, missing market expectations [1][4] - Impairment Loss: Rmb325 million impairment loss in 4Q24, up 13% YoY and 150% QoQ, primarily affecting inventory and account receivable provisions [1] - Gross Margin: Decreased by 1.8 percentage points YoY to 18.4% in 4Q24, indicating pressure from OEMs due to auto price competition [1] - Revenue Growth: Total revenue for 2024 reached Rmb27,618 million, a 26% increase YoY [4] Revenue Segments - Smart Driving Revenue: Revenue from autonomous domain controllers surged 63% YoY in 2024 and 76% YoY in 2H24, driven by projects from Li Auto, Xiaomi, and Zeekr [2] Future Outlook - Growth Potential: Anticipated benefits from the rising adoption of L2-3 smart driving technologies and integrated smart cockpit solutions [3] - Partnership with Nvidia: Potential to supply domain controllers for Nvidia's humanoid computing platform Jetson Thor, which could enhance Desay's valuation [3] Risks and Challenges - Price Competition: Increasing pressure from competitors in the automotive sector could impact margins and profitability [1][11] - Supply Chain Risks: Potential supply risks for upstream components may affect production and delivery capabilities [11] Valuation Metrics - P/E Ratio: Expected to decrease from 46.5 in 2023 to 22.1 by 2026, indicating improving valuation as earnings grow [6] - EBITDA Growth: Projected EBITDA growth from Rmb2,155 million in 2023 to Rmb4,069 million by 2026 [6] Conclusion - Despite a modest shortfall in 4Q24 earnings, the company is positioned to benefit from the growing demand for smart driving solutions and partnerships with key technology players. However, it faces challenges from competitive pricing pressures and supply chain risks. The overall outlook remains positive with a recommendation to stay overweight on the stock.