New Stock Preview | Huizhou Desay SV Automotive: With annual revenue exceeding 30 billion, where is the growth ceiling for the leading intelligent cockpit?

Hong Kong stock intelligent automotive electronic track looks forward to a heavyweight IPO. According to the Hong Kong Stock Exchange on April 12, Huizhou Desay SV Automotive Co., Ltd. (referred to as Huizhou Desay SV Automotive (002920.SZ)) has submitted its application for listing on the main board of the Hong Kong Stock Exchange, with Morgan Stanley and Huatai International as joint sponsors. The prospectus shows that Huizhou Desay SV Automotive is a global leading mobile intelligent technology platform, mainly focused on the research, development, manufacturing, and sales of smart cabins and smart driving as its core businesses. It also expands into new emerging businesses such as unmanned delivery vehicles and intelligent Siasun Robot & Automation. According to Frost & Sullivan's report, by 2025, the company ranks first in both the global and Chinese intelligent cabin domain controller market, as well as in the global and Chinese third-party intelligent driving domain controller market. It is worth mentioning that Huizhou Desay SV Automotive was already listed on the Shenzhen Stock Exchange in 2017, and this Hong Kong listing is expected to create a "A+H" dual capital platform. According to the prospectus, the company plans to use the funds raised for research and development, capacity expansion, strategic investments and mergers and acquisitions, as well as operational funds, to strengthen its technological barriers and global footprint. The intelligent cabin stabilizes the base, intelligent driving boosts growth Huizhou Desay SV Automotive, founded in 1986 as China Europe Electronic Industry Co., Ltd., has evolved over nearly 40 years in the automotive electronics field to become a global provider of smart cabin and smart driving solutions for global automakers. Its business focuses on automotive intelligence, with smart cabins and smart driving as the core, complemented by connected services and emerging businesses. The smart cabin, with the cabin domain controller as the core, integrates multiple screens, intelligent voice, HUD, and information entertainment system to achieve an intelligent system of human-vehicle-cloud collaboration. By 2025, the company's smart cabin business revenue reaches 20.585 billion RMB, accounting for 63.23% of total revenue. On the other hand, intelligent driving relies on sensors, on-board computing platforms, and algorithms to achieve environment perception, decision planning, and automatic control. By 2025, this business generates revenue of 9.7 billion RMB, with a year-on-year growth of 32.63%, and revenue share increasing to 29.8%, becoming the company's second growth curve. In terms of core competencies, the company, as an independent third-party Tier 1 supplier, does not participate in complete vehicle manufacturing, maintaining a neutral cooperative relationship with automakers that makes it easier to enter the global supply chain. Additionally, the company has in-house integrated hardware, software, and algorithm development capabilities, with its main products achieving ASIL-D certification, the highest level of functional safety certification, creating barriers in reliability and delivery capabilities. The company serves more than 80 global automakers, collaborating with nine of the top ten global sales automakers by 2025 and fifteen of the top Chinese sales automakers. Steady performance improvement, focusing on research and development and capacity expansion In terms of performance, from 2023 to 2025, Huizhou Desay SV Automotive's operating income increased from 21.908 billion RMB to 32.557 billion RMB, with a compound annual growth rate of 21.9%; while net profit attributable to shareholders grew from 1.542 billion RMB to 2.473 billion RMB, with a compound annual growth rate of 26.6%, showing profit growth faster than revenue growth. Due to increased industry competition and product price reductions, the company's overall gross profit margin decreased from 20.0% in 2023 to 19.1% in 2025. However, the net profit margin increased from 7.0% to 7.6%, indicating strong operational resilience. Operating cash flow in 2025 reached 2.884 billion RMB, with a year-on-year growth of 93.09%, reflecting significant improvement in cash returns and efficiency. In terms of growth drivers, performance improvement is driven by industry trends and competitive strengths. On one hand, the penetration rate of automotive intelligence continues to rise, with domain controllers and high-end intelligent driving installation rates growing rapidly; on the other hand, the company, with its technological and mass production advantages, continues to receive designated orders from automakers, leading to rapid growth in intelligent driving and stable growth in the cabin business, together driving revenue expansion. Economies of scale and cost control have effectively mitigated price pressure. To consolidate its growth momentum, the company's capital raised in this IPO will focus on research and development and capacity expansion. In terms of research and development, the company will continue to focus on the integration platform of cabin driving fusion, high computing power intelligent driving domain control, next-generation smart cabin, and vehicle-level algorithm research; in terms of capacity expansion, upgrading and expanding the facilities in East and South China to enhance delivery capabilities of intelligent cabins, intelligent driving domain control, and cabin driving fusion products to meet global automaker order demands. Vast industry space, A+H empowering global expansion In line with the company's operations and investment direction, the development space of the automotive intelligence industry will support its business, with this Hong Kong listing expected to drive the company's long-term strategic layout. According to the Frost & Sullivan report, driven by deepening intelligent and electrification, and the acceleration of automotive companies' adoption of intelligent cabins, the global market for intelligent cabin solutions is expected to increase from 185.8 billion RMB in 2021 to 370.5 billion RMB in 2025, with a compound annual growth rate of 18.8%; it is projected to reach 935 billion RMB by 2030, with a compound annual growth rate of 20.3%. Market growth is driven by enhanced consumer experiences, increased premium investment from automotive brands, and the decline in costs of high-performance SoC chips leading to increased domain controller penetration. Regionally, China is the largest and fastest-growing market for intelligent cabins globally, holding a 41.5% share of the market in 2025. The Asia-Pacific (excluding China), European, and North American markets are also steadily growing. The space for the smart driving track is even wider. The global market is expected to increase from 126.6 billion RMB in 2021 to 458.3 billion RMB in 2025, and is forecasted to reach 1.197 trillion RMB in 2030. The Chinese market will increase from 43.3 billion RMB in 2021 to 190.4 billion RMB in 2025, and is expected to reach 509.6 billion RMB in 2030, becoming a core engine of global growth. Relying on industry dividends, Huizhou Desay SV Automotive's future growth logic is clear. Firstly, the product structure continues to upgrade, with the cabin driving fusion solutions gradually entering mass production, significantly increasing the value per vehicle product, with a higher proportion of high computing power and integration products, optimizing revenue and gross profit structure; secondly, the acceleration of global expansion, with the company already establishing research and production bases in Europe and Southeast Asia, witnessing rapid growth in overseas orders, the Hong Kong listing expected to further enhance international brand influence, broaden the customer base of global automakers, and reduce reliance on the domestic market; thirdly, emerging businesses are gradually taking off, leveraging vehicle-level technology overflow, with new businesses such as unmanned delivery vehicles and intelligent Siasun Robot & Automation progressing in an orderly manner, potentially creating new growth curves. As a global leader in smart cabins and third-party intelligent driving domain controllers, Huizhou Desay SV Automotive fits well with the trend of intelligence, with solid core strengths. In the medium to long term, the automotive intelligence dividends will continue to be released, and the company, with product upgrades, global expansion, and new business layouts, has sufficient growth momentum. This Hong Kong listing is a critical step towards globalization, providing investors with a high-quality target for positioning in the core track of automotive intelligence. Subsequently, attention should be paid to industry competition, technology implementation, and supply chain fluctuations' risks.