Dongwu Securities (Hong Kong): Covered Joyson Electronics (00699) for the first time with a “buy” rating target price of HK$23
The Zhitong Finance App learned that Dongwu Securities (Hong Kong) released a research report stating that Joyson Electronics (00699) is an automotive technology supplier based in China with a global layout, and its business covers key components of automotive safety, automotive electronics, and robotics. The company is moving from the “shadow of Takata integration” to a new stage of “global safe cash bull+smart car tier 1+ robot second curve”. The first coverage gives a “buy” rating. The average valuation level in 2026 is PE = 18x, with a target market value of HK$35.6 billion and a target price of HK$23.
The main views of Soochow Securities (Hong Kong) are as follows:
One of the top three car safety companies in the world, cash flow restoration has entered a new stage
Through the acquisition of KSS and Takata assets, the company has become one of the few suppliers in the world that can provide a full range of passive safety systems to multinational car companies, and the revenue scale of the safety business has stabilized at the level of tens of billions of yuan. As expenses related to historical recalls and restructuring are gradually cleared, compounded by the volume of orders for new energy models, the bank determined that the safety business is expected to maintain medium to high single-digit revenue growth over the next 3 years, while gross margin will rise steadily, contributing to stable cash flow.
China's smart car tier 1, seize the opportunity to upgrade cockpit/network/domain control
The automotive electronics sector revolves around smart cockpits, intelligent connectivity, ADAS/domain control and new energy management systems, and has formed a complete product line and platform-based R&D system. In the context of the accelerated intelligence of its own brands, the company relied on local responsiveness and global project experience to continuously obtain targets for mid-range and high-end model projects, and achieved breakthroughs in key domain control products such as central computing units (CCU). The next-generation cockpit domain control and 800V high voltage platform have received orders or project pilots, and it is expected that they will soon enter the new product cycle.
Forward-looking layout of robots to create the second curve of “robot domain control+head assembly”
The company extended automotive safety and electronic technology capabilities, launched an integrated thorac+chassis solution for robot global controllers, and a robot head assembly integrating vision/audition/interaction, and established cooperation with many head robot players to have a first-mover card position advantage in the “personalized intelligence+industrial automation” wave. The bank believes that the robotics business is currently still in the early stages of investment, but judging from the technology path and customer structure, it is expected to expand a meaningful revenue volume within 3-5 years, bringing a valuation premium to the company.
Investment advice
The estimated revenue for 2025-2027 is 626/670/71.9 billion yuan, +12%/7% YoY, and net profit to mother is 16.18/20 billion yuan, +67%/12%/11% YoY. Considering that the company is a company listed in AH and the company's long-term valuation flexibility in the robotics business, considering A/H's auto parts company, the average valuation level in 2026 is PE = 18x, the target market value is HK$35.6 billion, and the target price is HK$23.
Risk Alerts
Overseas operations and exchange rate risk: The company's business layout is highly globalized, with factories and customers all over Europe, North America and Asia, and the uncertainty of the overseas operating environment also requires attention. Trade frictions, tariff policy adjustments, geopolitical conflicts, and stricter labor and environmental regulations in major producing and selling countries may drive up overall costs or disrupt supply chain stability. The company uses RMB as its accounting base, but there is a large proportion of foreign currency items in both revenue and costs. If the exchange rate of major currencies such as the euro and the US dollar fluctuates greatly against the RMB, it may also be reflected on the reporting side through exchange profit and loss and gross margin fluctuations.
M&A integration and asset impairment risk: The company has rapidly built a global platform through many domestic and foreign mergers and acquisitions, and has historically formed large-scale goodwill and intangible assets. If the target market demand of the merger and acquisition falls short of expectations, integration and collaboration are not progressing smoothly, the profit contribution of the relevant assets may continue to be lower than assumed at the time of the acquisition, thereby triggering impairment of goodwill and long-term assets, causing a major one-time impact on current profits and increasing performance fluctuations. Furthermore, if new mergers, acquisitions, divestitures or restructuring continue to be carried out in the future, they will also face uncertainty about transaction execution, integration implementation, and regulatory approval.
Risk of uncertainty in new businesses such as robots: The company is actively expanding into new businesses such as humanoid robots and physical intelligence, and the field as a whole is still in the process of exploring technology and business models. Although the relevant market space is generally favored, there is still great uncertainty about the industrialization schedule, the maturity of specific application scenarios, and the willingness of end customers to pay. The company's R&D investment, production line introduction, and ecological cooperation in the robotics direction will increase costs and capital expenses in the short term, and if the actual volume pace, stand-alone value and market share fall short of expectations, it may cause a mismatch between investment and return, which will drag down overall profitability.
Profitability fluctuations and cost control risks: The company faces multiple factors such as fluctuations in raw material prices, rising labor and energy costs, and changes in freight and storage costs. If the price of upstream raw materials (such as steel, non-ferrous metals, electronic components) continues to be high, compounded by the continuous cost pressure reduction requirements of automakers, the sales price of the company's products fails to synchronize cost changes, which will put pressure on gross margin repair and continuous improvement.