The company is the "little giant" of the car networking terminal, deeply binding big customers. The company’s main products include intelligent terminals of the Internet of Vehicles, intelligent modules of the Internet of Things, software and technical services; It is in the leading position in the automotive Bluetooth /WiFi module, vehicle networking TBOX, automotive eCall system, new energy management system and other fields. The intelligent terminal of vehicle networking is the company’s main business, with revenue accounting for 78.33% in 2023. Thanks to the prosperity of downstream industries, the company’s revenue has maintained rapid growth in recent years. From 2023 to 2024 H1, the operating income was 580/8.13/430 million yuan respectively, and YOY was 37.53%/40.18%/31.13% in turn. At the same time, based on the first-Mover advantage, the company deeply binds the industry leader, and the sales volume of SAIC ranked first in China in 23 years. The company has been cooperating with SAIC since 2012, and currently ships TBOX and eCall terminals in batches. SAIC Venture Capital, a subsidiary of SAIC Group, holds 2.14% of the company’s shares and is the fifth largest shareholder of the company. The company will continue to deepen its application expansion in the field of vehicle networking with SAIC and promote strategic coordination.

　　TBOX: Benefiting from the sales boom of self-owned brand passenger cars, the market space reached 10 billion, and domestic manufacturers gradually broke through. In 2023, the sales volume of self-owned brand passenger cars in China was about 14.596 million, achieving a rapid growth of 24.1%. TBOX, as the carrier of the interaction between car networks, plays an important role as a bridge, and the assembly rate is increasing year by year. According to the forecast of Gai Shi Automobile Research Institute, the market scale of TBOX for passenger cars will reach 13.78 billion yuan in 27 years. In terms of competition pattern, local suppliers mainly supply their own brands. In 2023, there were six domestic manufacturers in the top ten manufacturers of TBOX for passenger cars in China, and the domestic substitution trend was remarkable. At present, the company’s Internet of Things TBOX has a market share of 5.59% in the passenger car market. At the same time, it raises investment funds to lay out the research and development and industrialization projects of 5G vehicle networking TBOX, and seize the technical highland, which is expected to continuously increase the market share.

　　ECall: The company preempted the layout and benefited from the tide of independent car companies. ECall terminal is an important passive safety system unit after seat belt and airbag, which requires high strength and accuracy of its components. The European Union, Eurasian Economic Union, Britain, India, United Arab Emirates and other countries and organizations all require mandatory standard eCall smart terminals. Driven by the export growth of self-owned brand passenger cars (24Q1-Q3 increased by 27.8%), the demand for eCall terminals increased significantly. Since 13 years ago, the company has been deeply involved in the research and development of eCall. It is one of the few suppliers in China that has obtained eCall certification from the European Union, UN-R144 standard certification from the United Nations Economic Commission for Europe, and eCall certification from the United Arab Emirates. It has provided eCall terminals for local independent brands such as SAIC, Chery Automobile, Geely Automobile, Great Wall Motor, BYD, Weilai Automobile and other overseas markets, which will fully benefit from the increase in the export volume of independent brand passenger cars.

　　Investment suggestion: Huihan Co., Ltd. is one of the major manufacturers of domestic car networking terminals and modules. It has been deeply involved in TBOX and eCall systems for many years and has rich industry experience and customer accumulation, which will fully benefit from the increase in domestic sales of self-owned brand passenger cars and the export boom. It is estimated that the company’s net profit for 24-26 years will be RMB 192 million, RMB 257 million and RMB 319 million respectively, and the closing price on October 31, 2014 will be 29, 21 and 17 times of PE, which will be covered for the first time and given a "recommended" rating.

　　Risk warning: the risk of intensified market competition; Risk of price and profit rate changes; The sales volume of the company’s products is less than expected.