Auto & Transportation

According to customs data, 2022 will be a year of reversal for Junsheng Electronics, the leader of automobile safety business. In 2022, the total number of new orders received will exceed 75 billion yuan, of which the number of new orders received from Tesla will exceed 3 billion yuan

Recently, Junsheng Electronics said on the interactive platform that, benefiting from the continuous transformation and development of new energy and intelligence in the automotive industry, the company's new order acquisition has been relatively strong since 2022, with a cumulative new order of more than 75 billion yuan, of which the proportion of new energy vehicles accounted for more than 60% reached 45 billion yuan.

It is worth noting that the 45 billion orders include a variety of segmented products of automobile electronics and automobile safety, and the customer range covers well-known new forces of automobile manufacturing at home and abroad, head independent brands, and global mainstream well-known foreign brands and other enterprises. Of course, this also includes Tesla's new order of 3 billion yuan.

With the full load of orders, Junsheng Electronics achieved a turnaround in its performance in 2022, forming a difficult reversal. According to customs data, the company will achieve a total revenue of 49.7 billion yuan in 2022, with a year-on-year increase of about 9%, of which the automotive electronics business will achieve a revenue of 15.3 billion yuan, with a year-on-year increase of about 15%. The operating revenue of automobile safety business was about 34.4 billion yuan, up about 6% year on year; The net profit attributable to the owners of the parent company is expected to be 321 million yuan to 361 million yuan, an increase of 4.074 billion yuan to 4.114 billion yuan compared with the same period of the previous year.

In fact, it is only a small goal that can be achieved with a little effort for Junsheng Electronics to achieve pre-earnings in 2022.

As the top supplier of automotive electronics and automotive safety in China and even the world, Junsheng Electronics was founded in 2004, became the core supplier of Volkswagen and General Motors in 2008, and successfully listed on the Shanghai Stock Exchange in 2011.

Since then, the company has started the pace of globalization, and has successively acquired assets such as German PREH, German QUIN, American KSS and Japanese Takata (except for PSAN business), gradually realizing the strategic objectives of globalization and transformation and upgrading.

Up to now, Junsheng Electronics has two business divisions of automobile safety and automobile electronics, and two research institutes of intelligent automobile technology research institute and new energy research institute, forming a good situation in which automobile safety system, intelligent cockpit, intelligent driving, new energy management and other businesses go hand in hand. At present, the company has more than 40000 employees in 30 countries, and has three core R&D centers and supporting factories in major automobile producing countries around the world, mastering core technologies in the field of automobile safety and automobile electronics.

In the past ten years, except that in 2021, affected by the global COVID-19, chip shortage, automobile supply chain system shock and other factors, the company made a huge loss due to the provision for goodwill impairment of about 2.02 billion yuan for the relevant asset groups of the automobile safety business division, the company's performance in other years was very stable, especially after the acquisition of Japan Takata in 2018, the company's annual revenue was maintained at more than 40 billion yuan. Therefore, in this case, if you want to turn losses into profits, you can only control costs and expenses slightly. From the reasons for turning losses disclosed in the announcement, Junsheng Electronics does the same.

It seems easy to understand how to turn losses into profits, but what you may be more concerned about is why Junsheng Electronics, as a domestic automobile Tier1 manufacturer, can win the order of 3 billion yuan from Tesla in 2022 in a single year? Next, we will take apart and analyze the business of Junsheng Electronics.

The automotive safety business ranks second in the world, and has basically achieved full coverage of mainstream OEM and Tier1 manufacturers at home and abroad.

From the perspective of business composition, Junsheng Electronics currently has two main core businesses. One is the automobile safety business. Since the acquisition of KSS in 2016, the proportion of this business has increased to more than 50%. At present, its stable proportion in the company's business has reached about 70%; The other is the automotive electronics business, which is relatively stable and currently accounts for about 30%.

In the field of automobile safety, Junsheng Electronics is the leader in the field of global mobile travel safety, providing key safety components, systems and technologies for the automotive and non-automotive markets. The company's automobile safety business mainly includes the design, development and production of active and passive automobile safety, integrated safety system and its key components. At present, the company's products have been widely used in more than 300 passenger car models of more than 60 customers worldwide.

Among them, in the aspect of active safety, to avoid collision accidents through early warning and risk avoidance, its significance of providing maximum safety protection and even saving lives is far greater than traditional passive safety protection. At present, the active safety field of Junsheng Electronics mainly involves safety automation technology, accident prevention and protection system and other core technologies, such as driver monitoring system (DMS), advanced driving assistance system, intelligent sensor, active body panel, vehicle fire protection system and high-voltage battery disconnect device of new energy vehicles.

In terms of passive safety, it is an important guarantee to protect drivers and passengers of all ages, including airbag, seat belt, intelligent steering wheel, gas generator and other products. In recent years, driven by the design concept of "life safety first", countries around the world have developed towards higher safety standards, stricter regulations and increasingly strict rating framework, which has led to a rapid increase in the value of passive safety bicycles. According to customs data, the value of passive safety single car in 2021 is about 225 dollars, and the market size is about 18 billion dollars. With the increase of automobile production and the increase of single vehicle value, it is estimated that the global market size of passive safety systems will reach nearly 29 billion dollars in 2025.

As the core and main product of Junsheng Electronics, from airbag module and collision sensor to integrated tension sensor and inflatable seat belt, as well as important hybrid inflatable device, Junsheng Auto Safety System has always maintained its position as the industry leader in the latest collision protection technology.

In order to continue to expand its market share, Junsheng Electronics is investing 2 billion yuan to establish the Junsheng Safety Hefei New Industrial Base, which includes the R&D center, the test and verification laboratory, the passenger car steering wheel and the airbag production center. It is planned to add 4 million pieces of passenger car steering wheel system per year and 10 million pieces of airbag system per year to the company after it is put into operation in 2023.

In terms of integrated security solutions, Junsheng electronic integrated security solutions represent the cutting-edge technology direction of security product innovation, including vision and radar systems, advanced sensors and electromechanical integration products, accident prevention and protection systems, personal security protection and active steering systems. The company's products can not only realize the integration between safety systems, but also integrate with intelligent driving, intelligent cockpit and other related products.

From the perspective of industry competition pattern, due to the high entry threshold of the automotive passive safety industry, the share is mainly concentrated in the hands of individual manufacturers. According to customs data, in 2021, the share of Autoliv is 43%, Junsheng Electronics is 26%, and ZF is 24%. The total global market share of the three is 93%, and the market is highly concentrated.

From the perspective of supporting conditions, Autoliv is the largest manufacturer of airbag in the world. Its market share is high, its brand influence is large, its passive safety technology has obvious monopoly advantages, and China's market penetration is high. Its main customers are relatively concentrated, mainly German, Japanese and British car companies. The top five customers, such as Renault Nissan, Toyota and Volkswagen, contribute 51% to the revenue; ZF-Tianhe has a comprehensive range of products and services. Its main focus is on automatic driving and electric driving. Its main customers include SAIC Volkswagen, SAIC General Motors, Changan Ford, Dongfeng Citroen, Geely Automobile, Chinese Express, etc.

Junsheng Electronic Security System business is mainly carried out by acquisition. After years of integration and development, Junsheng Electronic's customers in the security field have achieved full coverage of domestic and foreign mainstream OEMs and world-renowned Tier1 manufacturers. Foreign customers mainly include Audi, BMW, Volkswagen, Ford, Nissan, Land Rover, Aston Martin, Mercedes-Benz, Toyota, Tesla, etc. Domestic customers mainly include SAIC, BYD, Weilai, Ideal, Xiaopeng, Geely, Great Wall and other independent and new power brands.

In terms of product categories, in 2020, Junsheng Electronics ranked first in the industry in the two major segments of safety belt and steering wheel, and the airbag market ranked second after Autoliv. At present, Junsheng Electronics supplies all major engine manufacturers in the world. The annual capacity of airbags and retractors is more than 100 million, and the capacity of steering wheel is more than 20 million.

In terms of competitors, the largest competitor of Junsheng Electronics in the field of passive security is Autoliv. In terms of gross profit rate and net profit rate, Autoliv's gross profit rate has been stable at about 20% and net profit rate has been stable at about 5% in the past five years. Compared with Autoliv, the leader of the security industry, the gross and net profit rates of Junsheng Electronics still have great room for improvement, and the revenue scale of Junsheng's security business is expected to further expand in the future.

The automotive electronics business has achieved full coverage of intelligence, electrification and networking, and there is huge room for future profit improvement.

In the field of automotive electronics, Junsheng Electronics anchors new tracks such as intelligent cockpit/Internet connection system, intelligent driving, new energy management system, and focuses on giving full play to the advantages of the Automotive Electronics Business Department and the two major research institutes of new energy and smart car technology, and constantly leads the scientific and technological revolution and industrial change.

（1） Intelligentization: intelligent cockpit, self-research and cooperative double-drive

In terms of intelligent cockpit, Junsheng Electronics can provide customers with a complete set of intelligent cockpit solutions, basically covering the main external intelligent operation, key products and internal software and hardware control and service products for human-vehicle interaction, specifically including intelligent cockpit domain controller, information entertainment system, various intelligent human-computer interaction control systems, global cloud services, navigation systems, software services, etc.

In addition to its own research, Junsheng Electronics has also actively carried out cooperation and empowerment with excellent enterprises in the industry chain in recent years to jointly promote the transformation and development of the industry.

For example, the company has conducted in-depth cooperation with Huawei in the field of smart cockpit, and its scope of cooperation has expanded to all models of Huawei Inside and Huawei Smart Select. At present, both parties are making every effort to promote the mass production and landing of Avita and other independent brand intelligent cockpit domain control related products; In addition, the company also cooperates with Qualcomm, and the latest generation of intelligent cockpit domain controller can support multiple cockpit chips such as Qualcomm's third generation intelligent cockpit chip (Qualcomm 8155), and the relevant solutions have also been gradually carried on different models of several main engine manufacturers.

Up to now, Junsheng Electronics has accumulated many high-quality customers in the smart cockpit business, such as Volkswagen, BMW, Audi, GM, Ford, Tesla, etc. While maintaining close cooperation with the above-mentioned vehicle manufacturers, the company has also expanded its mainstream joint ventures and self-owned brand customers in recent years, including North-South Volkswagen, Chang'an Ford and Geely.

In terms of intelligent driving, Junsheng Electronics' main products of intelligent driving include software technologies and services such as laser radar, intelligent driving domain controller, navigation engine, positioning engine and automatic parking engine. At present, the company's intelligent driving business is focusing on building a full stack of intelligent driving capabilities, speeding up the research and development of L2++to L4 level advanced auxiliary driving and automatic driving domain controllers and functional modules, and will take the lead in making breakthroughs in mass production and vehicle gauge level intelligent driving domain controllers.

In terms of chips, Junsheng Electronics mainly adopts the way of cooperation and establishes cooperative relations with Nvidia, Horizon, Ambarella, NXP, Tudatong and other manufacturers. The company's intelligent driving domain controller products will carry relevant chips to develop for different levels of intelligent driving and different types of customer groups. It is expected that many models will achieve fixed point and mass production in 2023.

（2） Electrification: new orders in the 800V high-voltage field will exceed 9 billion yuan in 2022

In terms of electrification, Junsheng Electronics has a relatively complete technical reserve of new energy management system, and has the R&D and manufacturing capacity of 12V, 48V, 400V, 800V and other full-voltage systems, mainly including battery management system (BMS), on-board charger (OBC), wireless charging system, high pressure fast charging, charging booster module (Booster), DC/DC converter, intelligent charging pile and other products, It can quickly respond to the new trend of multi-in-one electronic control module in the vehicle factory.

It is worth emphasizing that in the field of 800V high voltage, as early as 2019, Junsheng Electronics has taken the lead in supplying 800V high voltage fast charging products for the new electric sports car Taycan of Porsche in the world, and has continued to provide integrated charging and distribution solutions for global automotive enterprises in the process of electrification, covering the charging, discharging and voltage conversion scenarios of new energy vehicles. According to customs data, during 2022, the company continued to maintain a rapid development trend in this field, and has accumulated more than 9 billion new orders.

（3） Networking: the total amount of fixed points of new smart networking projects in 2022 is about 8 billion yuan

In terms of intelligent Internet connection, Junsheng Zhilian has more than 20 years of service experience in Tier1, the world's top car manufacturer, the navigation information entertainment system supporting Volkswagen, Audi, Ford and other world-famous OEMs, and the 5G-V2X mass production supporting Weilai, North-South Volkswagen, Gaohe and Chinese Express and other OEMs, and has strong competitiveness in multi-sensor data fusion, vehicle OTA, information security and other aspects.

Up to now, Junsheng Electronics has accumulated a total amount of about 8 billion yuan in the whole life cycle of the designated new smart networking projects in 2022. In the future, the company will strengthen the leading edge and business depth of intelligent Internet technology, and further promote the fixed-point application of technologies and products including V2X in more well-known vehicle manufacturers.

（4） Based on a high income base, there is still a large room for improvement in the future profits of automotive electronics business

In the field of automotive electronics, although the revenue of Junsheng Electronics is not high, only about 30%, based on its high revenue level, the company's revenue in this business in 2022 has also reached 15.3 billion yuan, which is equivalent to the total revenue of domestic competitors in the same industry, Decisive and Huayang Group in 2022.

However, from the perspective of gross profit margin, the average gross profit margin of Junsheng Electronics in the past five years is only 19.36%, which is 3.51 and 4.74 percentage points higher than that of Huayang Group and Desai Xiwei, respectively. With the strengthening of the competitiveness of the company's automotive electronics products and the improvement of costs and expenses, there is still much room for improvement in this area of profit in the future.

As the leading enterprise of China's automobile tier1, Junsheng Electronics has continued to increase its orders in recent years. As early as February 2022, the company's accumulated orders in hand (the whole life cycle) exceeded 295 billion yuan, of which the automobile safety business and the automobile electronics business were 220 billion yuan and 75 billion yuan respectively. If you add in about 70 billion yuan of new orders obtained during 2022, the company's accumulated orders in hand have reached nearly 400 billion yuan. These orders will generally be gradually put into production and delivered in the next five years, which will bring significant performance support to Junsheng Electronics.

The cooperation with Tesla has actually started many years ago.

As early as 2015, the German Prey, the holding subsidiary of Junsheng Electronics, won the purchase order for the sensors and related components of the new energy vehicle battery management system of Tesla, but the amount at that time was not large, not more than 10% of the operating revenue in 2014. With the rapid growth of Tesla's sales volume, the amount of cooperation between the two parties has been increasing in recent years. The company has been able to provide Tesla with a variety of products such as seat belts, airbags, steering wheels, battery management systems and related sensors. In 2019, the company