SENSSUN WEIGHING APPARATUS(002870)：INTELLIGENT UPGRADES OF AUTO INTERIORS AND RAPID GROWTH IN NEV BUSINESS

Senssun is a leading supplier of automotive cockpit components in China and ranks first in China and second in the world by market share of air outlets. Under the trend of automotive intelligence, forward-looking products such as concealed electric air outlets and gesture-controlled air management systems have begun to receive orders from luxury brands.
Senssun has vigorously expanded its new energy vehicle (NEV) business, becoming the first domestic supplier of intelligent charging piles for Volkswagen MEB platform models and also the supplier of high-quality clients such as SAIC Motor Passenger Vehicle and SAIC General Motors.
We forecast attributable net profit (ANP) of Rmb43mn/113mn/272mn in 2022E/23E/24E. Considering the impact of the non-recurring loss from the acquisition of JoysonQuin due to compensation as a result of its earnings commitment, we believe that the valuation after excluding non-recurring items is more reasonable. We forecast 2022E/23E/24E ex-one-off ANP of Rmb143mn/213mn/272mn. We err on the side caution to assign 23x 2023E PE based on ex-one-off ANP to derive a target cap of Rmb4.9bn, corresponding to a target price of Rmb37, and initiate coverage with a “BUY” rating.
Senssun bought 51% of JoysonQuin and ventured into auto parts.
Senssun started off with weighing apparatus and ranked first by market share in the industry from 2006 to 2021 according to data of the China Weighing Instrument Association. In 2020, the Company acquired 51% of JoysonQuin and ventured into auto parts with a focus on intelligent cockpits and NEV parts. In 1-3Q22, Senssun posted operating revenue of Rmb3.394bn (down by 0.9% YoY), with ANP at Rmb87mn (down by 20.0% YoY), mainly due to sporadic Covid flare-ups in China, as well as the high costs of raw materials, etc. In 3Q22 alone, Senssun recorded operating revenue of Rmb1.21bn (up by 15.7% YoY), with ANP at Rmb44mn (up by 33.3% YoY), showing signs of earnings recovery. In 1-3Q22, the Company’s operating revenue from the NEV/weighing apparatus segment accounted for 84%/15%, respectively. Its customer base mainly includes foreign brands, such as Volkswagen, Mercedes-Benz, BMW, Audi and General Motors (GM), with the top five customers contributing nearly 60% of the total revenue.
Auto interiors enter a stage of intelligent upgrading, and the construction of charging facilities is on the rise.
Under the trend of auto intelligence, the touch control unit and the electronic control unit will be integrated into the auto interiors to achieve a variety of intelligent functions. We expect that the content per vehicle (CPV) of auto interiors will post a CAGR of 5%, which points to a global market size of nearly Rmb27bn/77bn for air outlets and interiors by 2025. In a breakdown of products by market share, Senssun, Fuerda Smartech and Jifeng Auto Parts are major air vent suppliers in China, while Ningbo Huaxiang, Senssun and Novem account for a high proportion in the domestic interior market. In terms of NEV charging and power distribution, the shipments of NEVs in China have increased rapidly, which recorded 3.32mn units in 2021 and will likely reach 15mn units by 2025. Charging piles are supporting facilities for NEVs, and its ownership is likely to grow rapidly. In 2021, the number of charging piles in China rose to 2.617mn units (up by 70.1% YoY). At present, the vehicle-to-pile ratio in China is 3:1, still far below the 1:1 proposed by the National Development and Reform Commission (NDRC). According to the calculations of 36kr Research Institute, the market size of China's charging pile industry is likely to reach Rmb287bn by 2026.
Intelligent cockpit parts: widely used by global mainstream OEMs.
Senssun’s air outlets and wood/aluminum trims are widely used in foreign luxury brands, such as Mercedes-Benz, BMW, and Audi, and have acquired new customers like NIO, Li Auto and other start-up carmakers. The market share of the Company’s air outlets ranks first in China and second in the world. It has also mastered a variety of special processes, including wood component treatment with polyurethane (PUR), surface treatment and production of aluminum products and 3D blow molding. And the Company is also committed to integrating advanced electronic actuators into interior parts to improve the intelligence level of vehicles. In this way, the CPV is likely to increase by more than 20%. The forward-looking products developed by the Company, such as concealed air outlets, gesture-controlled air management systems, and wood touch intelligent interiors, have received orders from American luxury brands and other customers. The application of new low-carbon and environment-friendly surface materials such as aluminum, carbon fiber and wood has been continuously promoted, and the Company has obtained the FSC certificate granted by TüV SüD.
Efforts on charging and power distribution products will likely fuel high-speed growth in the revenue of the NEV business.
Charging and power distribution products for NEVs are the key development direction of the Company, including products of intelligent charging piles, high-voltage distribution boxes, high-voltage charging wires and so on. In the last three years, it has gained 37 patents in the field of NEV high-voltage distribution modules and charging & distribution systems. The Company's intelligent charging pile integrates a variety of communication methods and carries additional functions such as reservation-based charging and online upgrading. The new-generation AI intelligent charging pile under development will focus on enhancing intelligent functions, such as intelligent recognition and voice interaction. Senssun is one of the first domestic suppliers of intelligent charging piles for Volkswagen MEB platform models. In 2021, the total amount of new life cycle orders for the Company’s NEV business reached Rmb1.9bn with an ample order book. In 1H22, its NEV business achieved revenue of Rmb202mn (up by 227% YoY). We expect that the business will maintain rapid growth.
Potential risks: A decline in automotive sales volume; a lower-than-expected penetration rate of NEVs; technology and product iteration; goodwill impairments; management and integration risks.
Investment strategy: Senssun’s automotive interior parts are widely used in mainstream foreign brands such as Mercedes-Benz, BMW, Audi, and so on, and the Company has been constantly promoting the intelligent upgrading of its products. Its NEV business has expanded rapidly on the back of an enriched product matrix and a high-quality customer base. We forecast 2022E/23E/24E ANP of Rmb43mn/113mn/ 272mn. Considering the impact of the non-recurring loss from changes in the fair value of financial assets due to compensation as a result of its earnings commitment, we believe the valuation after excluding non-recurring items is more reasonable. We forecast 2022E/23E/24E ex-one-off ANP to be Rmb143mn/213mn/272mn. We err on the side of caution to assign 23x 2023E PE based on ex-one-off ANP to derive a target cap of Rmb4.9bn, corresponding to a target price of Rmb37, and initiate coverage with a "BUY" rating.
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   【免责声明】本文仅代表第三方观点，不代表和讯网立场。投资者据此操作，风险请自担。