The Zhitong Finance app learned that Fangzheng Securities released a research report saying that the current cooperation between Huawei and Changan is expected to lead the development of the smart car industry to a new level and lead new trends in industry development. Huawei's smart car solutions focus on intelligent driving and smart cockpits. Through an open smart car digital platform, intelligent driving computing platform, and HarmonyOS smart cockpit platform, it deeply empowers car companies to build good cars. Related targets: Changan Automobile (000625.SZ), Vail Co., Ltd. (603501.SH), Gongda Electroacoustic (002655.SZ), Crystal Optoelectronics (002273.SZ), Landai Technology (002765.SZ), Traceability Co., Ltd. (301397.SZ), Dongan Power (600178.SH), etc.

Incident: On November 25, Changan and Huawei signed a “Memorandum of Investment Cooperation”. Huawei plans to establish a company that provides automotive intelligent systems and component solutions. Changan Automobile plans to invest in the company and carry out strategic cooperation (the share ratio of Changan Automobile and related parties shall not exceed 40%). The company's business scope includes automotive intelligent driving solutions, automotive intelligent cockpits, smart car digital platforms, smart car clouds, AR-HUDs, and smart car lights. Huawei has full-stack self-research capabilities for intelligent driving, and Changan Automobile has leading vehicle R&D and manufacturing capabilities. This cooperation between the two sides will form a high degree of strategic collaboration and work together to build leading intelligent driving in China.

Fangzheng Securities's views are as follows:

The project company is the core asset of the smart car era, including the entire vehicle BU assets and other departments of car-related business, especially automotive intelligent driving solutions, smart car cockpits, smart car digital platforms, smart car clouds, etc. It is a highland of automotive intelligence and the heart of Huawei's car BU. In particular, intelligent driving is the core research and development that Huawei has invested heavily in in the past. It is in a leading position in the world and has played a key role in the sales of Huawei's partner models.

Changan Automobile will become the core leader in intelligence, investment projects will become strategic milestones in the history of Changan Automobile's development, and Changan Automobile will continue to lead in the era of automobile intelligence! The shareholding ratio of Changan Automobile and related parties is no more than 40%. It is determined that it has become the car enterprise industry leader of the project company in one fell swoop. In particular, in the past, the company was deeply integrated with Huawei, including strategic cooperation between its Avita and Deep Blue platforms. This large-scale investment in the project company will greatly enhance the company's intelligence-related business, close cooperation, and deep empowerment. The company will experience a qualitative improvement in its brand strength, R&D strength, and especially intelligent driving strength. This is an important milestone in the company's long-term value, and it is also the most important internal change in the company's valuation restructuring.

Avita is expected to benefit deeply. Changan Automobile's new flagship product under the “CHN” model is further deeply integrated with the project company, and is expected to take off! Avita is estimated to exceed 10,000 in 72 hours, exceeding expectations! Following the launch of Avita 11 in August 2022, Avita 12 was officially released on November 10, '23. In just 72 hours of launch, the cumulative quantity of Avita 12 has reached 11,128 units. The Avita 12 is equipped with ADS2.0, and the intelligent driving hardware is luxurious. The vehicle is equipped with 29 smart driving sensors, including 3 lidar, and is equipped with the Huawei MDC810 computing unit, making another breakthrough in intelligent driving capabilities. At the same time, the Avita 12 is the first batch of models equipped with the Huawei Hongmeng cockpit 4.0, providing users with a silky human-vehicle interaction experience.

Huawei's smart car solutions focus on intelligent driving, smart cockpit, smart electric driving, intelligent display, and intelligent connectivity. Through the open smart car digital platform, intelligent driving computing platform, and HarmonyOS smart cockpit platform, it deeply empowers car companies to build good cars. This cooperation between Huawei and Changan is expected to lead the development of the smart car industry to a new level and lead new trends in industry development.

Risk warning: Downstream demand falls short of expectations, industry competition intensifies, and R&D progress falls short of expectations.