Date: 26 September 2024
Broker: UOB Kay Hian (Hong Kong) Limited

1. Company Overview

Joyson Electronics (stock code: 600699 CH) is a leading automotive safety and electronics manufacturer based in China. The company focuses on providing key components such as steering wheels, airbags, and advanced driver assistance systems (ADAS) for electric vehicles (EVs) and other automotive sectors.

2. Hefei Plant Expansion

Joyson’s automotive safety business has significantly ramped up production capacity at its Hefei plant. Less than a year after beginning operations at the end of 2023, the plant’s monthly sales revenue has already exceeded RMB 100 million.

The Hefei plant mainly caters to leading domestic EV manufacturers and has rapidly expanded to meet the growing market demand from customers such as BYD, Leapmotor, and Chery. The plant is designed with an annual production capacity of 4 million units of steering wheels and 10 million units of airbags.

3. Order Book and Production Capacity

• New Orders: Joyson has secured RMB 40 billion in new orders for its automotive safety business during the first half of 2024.
• Economies of Scale: The rapid production ramp-up is expected to help Joyson achieve greater economies of scale, improving profit margins and supporting the execution of its large order book.

4. Financial Forecasts (2024-2026)

UOB Kay Hian maintains a positive financial outlook for Joyson, projecting strong growth over the next few years:

• 2024 Net Profit: RMB 1,507 million
• 2025 Net Profit: RMB 2,029 million
• 2026 Net Profit: RMB 2,587 million

These profit projections reflect the company’s increasing production capacity and robust order intake from the automotive safety division.

5. Investment Outlook

Joyson’s expansion of its Hefei plant and its ability to secure large orders positions the company for significant growth in the coming years. Its focus on the rapidly growing EV market, particularly with leading Chinese EV manufacturers, ensures that the company is well-placed to capitalize on the increased demand for automotive safety components. UOB Kay Hian maintains a BUY rating for Joyson Electronics with a target price of RMB 26.00.