XINGYE TECH.(002674)2022-11-17 14:38Group 1: Company Performance and Market Position - Hongxing Automotive Leather's revenue in 2021 was only 120 million, but it grew nearly 100% compared to 2020, driven by the expansion of production capacity in response to the growth of domestic new energy vehicle sales [1] - The company is currently a key supplier for leading new energy vehicle brands such as NIO, Li Auto, and others, with a robust order book [1][3] - The market for Hongxing Automotive Leather is expected to expand significantly alongside the growth of new energy vehicle sales in the coming years [1] Group 2: Raw Material and Production Insights - Raw materials account for approximately 50% of the leather cost, with the company integrating raw material procurement and product grading [3] - The company is preparing to enter the traditional automotive interior materials market as its production capacity expands [3] - The business of Baotai Leather, which focuses on secondary leather, complements the existing operations and aims to further exploit the value of secondary leather [3] Group 3: Challenges and Recovery - The company's Q1 performance declined due to the impact of the pandemic and a downturn in the secondary market affecting the fair value of purchased funds [4] - Order demand decreased in key regions like Guangzhou and Wenzhou due to pandemic restrictions, which also affected logistics [4] - The company anticipates a recovery in order demand from July to September, as pandemic controls are gradually lifted [4] Group 4: Product Composition and Future Outlook - Genuine leather currently maintains a stable proportion in automotive interior materials, with no significant risk of being replaced by other materials [4] - The use of genuine leather aligns with carbon reduction goals, as it is a byproduct of the meat industry, thus reducing waste [4] - The demand for genuine leather in automotive interiors is expected to increase with the upgrading of automotive consumption [4]