Soochow International: Initiates "buy" rating for Ningbo Joyson Electronic Corp. (00699) with a target price of HK$23.

Soochow International released a research report stating that they are covering Ningbo Joyson Electronic Corp. (00699) for the first time, giving it a "buy" rating. They expect revenues for the years 2025-2027 to be 62.6/67/71.9 billion yuan, with a year-on-year increase of +12%/7%/7%, and net profit attributable to shareholders to be 1.6/1.8/2 billion yuan, with a year-on-year increase of +67%/12%/11%. Taking into account the company being listed in both A and H-share markets and the valuation flexibility in its long-term Siasun Robot&Automation business, the comprehensive valuation model for automobile component companies in A/H markets in 2026 is an average PE ratio of 18x, with a target market value of 35.6 billion Hong Kong dollars and a target price of 23 Hong Kong dollars. Soochow International's main points are as follows: Ningbo Joyson Electronic Corp. is a Chinese-based global automotive technology supplier with businesses covering automotive safety, electronic components, and key components for Siasun Robot&Automation. The company is transitioning from the "Takata integration shadow" to a new phase of "global safety cash cow + intelligent automotive Tier 1 + Siasun Robot&Automation second curve". The core investment logic includes the following three points: 1. One of the top three global automotive safety companies, with cash flow recovery entering a new phase. Through the acquisitions of KSS and Takata assets, the company has become one of the few global suppliers capable of providing a full range of passive safety systems to multinational automakers. The company's safety business revenue is stable at several hundred billion yuan levels. As historical recall and restructuring-related expenses gradually clear, combined with increasing orders for new energy vehicle models, the company is expected to maintain mid to high single-digit revenue growth in the safety business over the next 3 years, while steadily increasing gross margins, contributing to stable cash flow. 2. China's intelligent automotive Tier 1, seizing the opportunity to upgrade cabins/network connectivity/domain control. The automotive electronics sector revolves around intelligent cabins, intelligent network connectivity, ADAS/domain control, and new energy management systems, forming a complete product line and platform R&D system. With the acceleration of intelligentization in domestic brands, the company, with its local response speed and global project experience, continues to secure projects for mid to high-end vehicle models, and has made breakthroughs in key domain control products like the central computing unit (CCU). New generation cabin domain control, 800V high-voltage platform orders or project pilots are expected to soon enter a new product cycle. 3. Forward-looking layout for Siasun Robot&Automation, creating the "Siasun Robot&Automation domain control + leading assembly" second curve. The company extends its automotive safety and electronic technology capabilities, introducing the Siasun Robot&Automation global control chest and chassis integration solution, as well as the integrated vision/sound/interaction Siasun Robot&Automation leading assembly. They have also established partnerships with multiple leading Siasun Robot&Automation players, positioning themselves with advantages in the "embodied intelligence + industrial automation" wave. The report believes that the Siasun Robot&Automation business is still in the early investment phase, but from a technological and customer structure perspective, it is likely to expand into a significant revenue volume within 3-5 years, bringing a valuation premium to the company.