2021-12-08 Open Source Securities Co., Ltd. Deng sound, Wang Binyu studied Lingdian electric control and issued a research report "the company's first coverage report: an independent supplier of scarce automotive electronic control systems, with broad domestic alternatives". This report gives a buy rating to Lingdian Electric Control, and the current share price is 176.97 yuan.

Diamond Electric Control (688667)
Lingdian Electric Control: a domestic solution provider of automobile power electronic control system.
The company is a scarce automotive power electronic control system solution provider, electronic control system products are used in N1/M1 gasoline vehicles, pure electric vehicles, hybrid vehicles and other models. Since its establishment, the company has persisted in independent research and development, committed to breaking the hollow situation of the core technology of the automotive industry, gradually replacing foreign investment, becoming a domestic supplier of engine management system, and occupying a large share of the N1 model market. We believe that the company has a strong scarcity in the field of automotive electronic control system, with the company's in-cylinder direct injection EMS entering the passenger car market, the gradual mass production of hybrid electronic control system, and the larger layout of pure electric vehicle electronic control system, it is expected to enter the performance harvest period in the next few years. It is estimated that the company's revenue from 2021 to 2023 will be 8.97,12.10 and 1.614 billion yuan, the net profit will be 1.79,2.50 and 361 million yuan, and the EPS will be 3.48,4.85,7.00 yuan per share. The corresponding share price PE will be 46.6,33.4,23.2 times, and the "buy" rating will be given for the first time.
Engine management system: scarce EMS independent manufacturer, broad space for domestic replacement
The technical barriers and industrialization characteristics of EMS determine the high entry threshold of the industry. Multinational EMS enterprises are the main players of M1 passenger car market, and independent EMS manufacturers have realized a certain range of domestic substitution in N1 market (such as light truck, micro-card, etc.). In recent years, the company N1 class and cross-type passenger cars EMS market share has increased steadily. The in-cylinder direct injection EMS matching model independently developed by the company has entered the three-high calibration stage, which is the first in-cylinder direct injection vehicle equipped with independent electronic control system in China, which helps the company to enter the passenger car market, and there is a broad space for domestic substitution.
Hybrid vehicle electronic control system: incremental electronic control has achieved mass production and has great potential for development.
The company has developed a variety of hybrid management systems, including incremental hybrid, 48V micro-hybrid, P2 structure mixing, power shunt mixing, etc., and has realized the mass production of the electric control system of incremental electric vehicles, and the customers are expected to further expand. With the rapid development of hybrid car market, this business has a broad market prospect.
Pure electric vehicle electronic control system: adhere to the cost-leading strategy, resources work together to help open the market
Pure electric vehicle electronic control system market competition pattern is relatively scattered, the company earlier to achieve the industrialization of MCU and VCU, adhere to the cost-leading strategy. Increase promotion efforts in 2021, supporting a number of models in 2022 is expected to contribute to revenue. The company is expected to take advantage of EMS and hybrid customer resources to quickly open the pure electric vehicle market.
Risk tips: lack of core relief is not as expected, car sales decline, customer expansion progress is not as expected

The stock has been rated by four agencies and four buy ratings in the last 90 days; the average institutional target price has been 162.5 in the past 90 days; according to the Securities Star valuation analysis tool, Lingdian Electric Control (688667) has a good company rating of 3.5 stars and a good price rating of 1 star. The comprehensive valuation rating is 2 stars. (rating range: 1-5 stars, up to 5 stars)