Investment Rating - The report assigns a Buy rating to Nexteer Automotive (1316 HK) with a target price of HKD 7 0, representing a 17x P/E for 2024 [1][3] Core Views - Nexteer is positioned as a global leader in steer-by-wire (SBW) technology, which is a key component for autonomous driving The company is expected to benefit from the industry upgrade towards autonomous driving [1][2] - Nexteer has secured significant orders, including a USD 2 billion SBW order from a leading German automaker in 2022 and a second SBW order in 2023 The company has also entered into a partnership with Tesla, supplying EPS for the Model Q in North America, with potential expansion to Europe and China [2][28] - The company’s revenue is expected to grow from USD 4 569 million in 2024E to USD 5 306 million in 2026E, with net profit increasing from USD 132 million in 2024E to USD 224 million in 2026E [27][32] Business Overview - Nexteer is a century-old company founded in 1906, specializing in automotive steering and driveline systems Its product portfolio includes EPS, CIS, DL, HPS, SBW, eDrive, and software solutions [8][17] - The company serves over 60 global automakers, including BMW, BYD, Ford, General Motors, Toyota, and Tesla North America is its largest market, contributing 54% of revenue in 2023, while China is the fastest-growing market, accounting for 29% of revenue [8][19] - EPS is the largest revenue contributor, accounting for 68% of total revenue in 2023, followed by DL (19%) and CIS (9%) [18][19] Industry Overview - The automotive steering system has evolved from mechanical steering (MS) to hydraulic power steering (HPS), electric power steering (EPS), and now steer-by-wire (SBW) SBW is considered the next-generation technology, essential for high-level autonomous driving due to its precision and integration with advanced driver-assistance systems (ADAS) [20][21][22] - SBW offers advantages such as improved safety, comfort, and integration with vehicle control systems It eliminates mechanical connections, reducing driver fatigue and enabling personalized driving experiences [23][24] Competitive Advantages - Nexteer has a strong market position with a 20% market share in North America and ranks among the top three globally in steering systems The company’s long-standing relationships with major automakers create high barriers to entry for competitors [25] - The company has a robust R&D capability, with over 1,000 engineers and technicians and a 3 6% R&D expenditure-to-revenue ratio in 2023 This ensures continuous innovation and product development [26] - Nexteer’s global presence includes 27 factories, 13 customer service centers, and 5 technology centers across the US, China, Japan, India, Germany, Poland, Italy, and France [25] Financial Performance - Nexteer’s revenue grew from USD 3 84 billion in 2022 to USD 4 21 billion in 2023, driven by strong demand in China and new orders However, net profit declined to USD 37 million in 2023 due to operational challenges such as US labor strikes and supplier issues [15][16] - The company’s gross margin is expected to improve from 9% in 2023 to 12% in 2026, with net margin increasing from 1% in 2023 to 4% in 2026 [16][33] - Nexteer’s ROE is projected to rise from 1% in 2023 to 5% in 2026, reflecting improved profitability and operational efficiency [33] Growth Drivers - Autonomous driving trends: Nexteer is well-positioned to capitalize on the shift towards SBW, which is critical for autonomous vehicles The company has established research partnerships with several Chinese automakers, indicating strong growth potential in China [2][28] - New factory in China: Nexteer’s new plant in Changshu, set to begin operations in 2025, will produce EPS and SBW products, further supporting its growth in the Chinese market [19] - Strong order pipeline: The company secured USD 6 1 billion in new orders in 2023, with expectations of similar or higher order volumes in 2024 [2][28]
耐世特：全球转向龙头，自动驾驶与特斯拉产业链稀缺标的