Company Profile

Desay SV, established in 1986, is a leading company in the automotive electronics field, with its main products including intelligent cockpits, intelligent driving, and connected services.

Investment Summary

Sequential Improvement in Q4, Full-Year Results Up by Over 20%

In 2025, the Company reported revenue/net profit attributable to the parent company/net profit attributable to the parent company excluding non-recurring items of RMB32,557 million/RMB2,454 million/RMB2,414 million (RMB, the same below), respectively, up 17.88%/22.38%/24.05% yoy. Gross margin was 19.07%, down 0.81 ppts yoy. Net cash flow generated from operating activities reached RMB2.88 billion, up +93.1% yoy. In 2025 Q4, the Company reported quarterly revenue/net profit attributable to the parent company/net profit attributable to the parent company excluding non-recurring items of RMB10,221 million/RMB666 million/RMB690 million, respectively, up 18.25%/11.34%/38.71% yoy and 32.87%/17.82%/20.72% qoq. The sequential recovery in Q4 results was mainly driven by qoq growth in sales volume from key customers such as Geely, Xiaomi and Li Auto.

Deepening Deployment in Automotive Intelligence

Benefiting from the continued increase in penetration of automotive intelligent products and the significant rise in intelligent value per vehicle, the core business segments achieved strong growth in results. 1) Smart cockpit: Full-year revenue reached RMB20,585 million. Annualised sales of new project orders exceeded RMB20 billion. The Company continued to secure new project orders from major domestic and international OEMs, including Chery Automobile, Geely Auto, GAC Toyota, Li Auto, Great Wall Motor, Xiaomi Auto, XPeng Motors, Changan Automobile, VOLKSWAGEN, MERCEDES-BENZ and SKODA. 2) Intelligent driving: Full-year revenue reached RMB9.7 billion, up 32.63% yoy. Annualised sales of new project orders exceeded RMB13 billion. With the rapid adoption of intelligent driving technologies, the accelerated commercialisation of advanced functions such as urban NOA is expected to further drive high-speed growth in the Company's intelligent driving business. 3) Connected services: The Company's self-developed "Blue Whale" ecosystem achieved major breakthroughs during the reporting period. Based on AIOS, the Company comprehensively upgraded the cockpit intelligent software foundation, enabling full-stack decoupling of software and hardware and flexible adaptation across different hardware platforms and large models. It possesses full-stack AI capabilities ranging from large-model algorithms and AIOS middleware to Agent development, providing a robust full-stack software solution for the development of the AI cockpit software ecosystem.

Focus on R&D, Expansion into Innovative Businesses

The Company has consistently maintained a high level of R&D investment. In 2025, R&D expenditure reached RMB2,637 million, accounting for 8.10% of revenue. R&D personnel represented 42.40% of the Company's total workforce. The Company has established R&D centres in Singapore, Germany, Japan, and across China in Nanjing, Chengdu, Shanghai, Shenzhen, Guangzhou, Beijing, Taiwan and Changsha, ensuring sustained technological leadership and a leading position in the industry.

In terms of innovative businesses, the Company officially launched the "Chuanxing Zhiyuan" low-speed autonomous vehicle brand, expanding into a new track in last-mile logistics. Meanwhile, the Company continues to deepen industrial synergy in frontier intelligent fields, advancing in-depth cooperation and implementation with multiple embodied intelligence enterprises. It has also successfully secured designated orders for robot domain controller projects, with related products planned to achieve mass production and delivery in 2026.

Steady Progress in Internationalisation Strategy

In 2025, the Company's overseas revenue increased by 41.12% to RMB2.41 billion, with its contribution rising to 7.40%, up 1.22 ppts yoy. The gross margin of overseas business was higher than that of the domestic market. In 2025, overseas gross margin reached 27.28%, up 1.34 ppts yoy and approximately 9 ppts higher than the domestic gross margin in the same period. As the internationalisation strategy continues to advance steadily, the Mexico and Indonesia plants commenced operations in 2025, while the Spain plant is expected to begin operations this year. The expansion of overseas production capacity will provide strong support for profit growth.

Investment Thesis

The Company is a leader in the automotive electronics sector. Benefiting from ongoing industry development and sustained R&D investment, it maintains a technological leadership advantage while actively exploring new business opportunities. We remain firmly optimistic about the Company's long-term development prospects.

As for valuation, we expected diluted EPS of the Company to RMB 4.65/5.50/6.51 of 2026/2027/2028. And we accordingly gave the target price to RMB121, respectively 26/22/19x P/E for 2026/2027/2028. "Accumulate" rating. (Closing price as at 30 December 2026)

Peer Comparison

Source: Wind, Phillip Securities Hong Kong Research

PE BAND

Source: Wind, Phillip Securities Hong Kong Research

Risk

Progress of new production line is below expectations
Electric vehicle sales fall short of expectations
Macroeconomic downturn affects product demand
Sharply rising raw material prices or sharply falling product prices

Financials

(Closing price as at 30 March 2026)

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