NBJF(603997)2024-11-14 07:53Key Points Industry and Company * Company: Jiefeng Co., Ltd. * Industry: Automotive seating and interior components Core Views and Arguments * Revenue and Profitability: Jiefeng reported revenue of 5.9 billion RMB in Q3 2024, up 7% YoY, but net profit was -5.9 billion RMB, a significant decline from the previous year. This was primarily due to large write-offs in Q3, including the sale of TMD, European layoffs, and impairment charges. * TMD Sale: The sale of TMD had a negative impact on the company's performance, with an estimated impact of 2.5 billion RMB. TMD had been a drag on Glamor's performance, with annual losses of 200-300 million RMB, accounting for 70-80% of the losses in the Americas. * European Layoffs: Layoffs in Europe resulted in approximately 2 billion RMB in expenses, mainly due to the poor performance of the European automotive industry. Additionally, there were intermediary fees of about 20 million RMB. * Highway Car Impairment: Impairment charges for Highway Car had a negative impact of over 30 million RMB, mainly due to the uncertain future of the Highway Car OEM. * Traditional and New Business: Traditional businesses such as headrests and armrests remained stable, with EBITDA profit margins between 15-17%. New businesses such as passenger car seats achieved revenue of 1.1 billion RMB, exceeding the budget, with a profit contribution of over 20 million RMB and a profit margin of 2%, also exceeding the budget. Air vents achieved revenue 30% higher than expected and remained profitable. The car refrigerator began contributing revenue in Q2 and turned positive in Q3, achieving several million RMB in profit, ahead of the budget. * Glamor China: Glamor China was the main profit contribution area, with stable revenue growth. However, the impairment charge for Highway Car affected the EBITDA profit margin, which fell slightly. If the impairment charge is excluded, the profit margin is expected to be similar to last year, around 10%. Glamor's performance in Europe and the Americas in Q3 was affected by the decline in industry beta, showing a year-on-year decline trend. The company took measures such as layoffs to respond to the decline in industry beta. * New Projects: Jiefeng has several new projects coming online in Q4 and next year, including Shanhai T1, FAW Volkswagen Tiguang, Chery iPad123, Audi PP platform models, Geely models, and new energy vehicle brands such as Xpeng and Li Auto. These models are expected to contribute significantly to revenue growth. * Customer Strategy: Jiefeng focuses on head customers, including new energy vehicle brands, joint ventures, and leading domestic brands. This strategy ensures stability and long-term cooperation. * Competitive Advantage: Jiefeng has a significant competitive advantage in the passenger car seat market, including high product quality, strong customer expansion capabilities, and efficient management. The company also continues to invest in capacity expansion and cost optimization. Other Important Points * Factory Capacity: Jiefeng has sufficient factory capacity, with many factories under construction or not yet fully operational. The company carefully plans capacity based on customer demand to avoid low utilization rates and high costs. * Investment in New Projects: Jiefeng plans to invest in a new seat research and development center in Shanghai next year, with an estimated investment of 4-5 billion RMB. * Autonomous Driving: Jiefeng is actively developing autonomous driving-related products and technologies, including autonomous driving seats and control systems. * Global Market: Jiefeng has a strong global presence, with operations in Europe, the Americas, and Asia. The company is committed to expanding its global market share and becoming a leading player in the automotive seating industry.