LCD instrument, how profitable?
This week, as Tianyouwei Electronics released its IPO prospectus for the first time, this traditional automotive instrument company, which focuses on products such as electronic instrument clusters, full LCD instrument clusters, and dual-screen instruments, revealed its financial performance in the past few years. data.
As a typical representative enterprise in the transformation and upgrading of traditional automotive instruments, from 2003 to 2014, the company's main products were traditional electronic instrument clusters, and its main customers were SAIC-GM-Wuling, Geely Group, Chery Automobile, Dongfeng Xiaokang, etc.
From 2015 to 2019, the company grasped the development trend of the industry and customer needs, successfully developed products such as full LCD instrument clusters and dual-screen instruments, obtained orders from customers such as Hyundai Motor Group, Changan Automobile, and BYD, and further expanded production capacity.
From 2020 to the present, with the increase in the penetration rate of automobile smart cockpits and the increase in sales of products such as full LCD instrument clusters and dual-screen instruments, Tianyouwei still relies on instrumentation products, and no major changes have taken place in its business.
Note: The chart is from the prospectus, the same below
The data shows that during the reporting period (2020-2022), the company's operating income was 934 million yuan, 1.168 billion yuan, and 1.972 billion yuan, and its net profits were 36.7703 million yuan, 114.3617 million yuan, and 394.799 million yuan.
Correspondingly, in the past three years, Tianyouwei’s net profit margins were 3.96%, 9.76% and 20.03% respectively. In comparison, the net profit margins of Desay SV, the leading company in the industry, in the past three years were 7.62%, 8.69% and 7.86% respectively.
Judging from the data, Tianyouwei's business model is mature and stable, and its overall operating performance shows a steady growth trend. This is due to the explosive demand for LCD instruments in the global passenger car market, especially in China, in the past few years.
As a key part of human-computer interaction, traditional automotive mechanical instruments are also undergoing digital and intelligent upgrades. Especially in the upgrading of vehicle intelligence and the transformation of electrification, traditional instruments have the disadvantages of slow response, low precision and single display mode, which can no longer meet market requirements.
In addition, based on the vehicle's digital and network signals, the LCD instrument can realize the digital display of the real vehicle's running status, and through the interaction with the navigation host system and the intelligent driving system, it can realize navigation maps, multimedia entertainment, Bluetooth phones, intelligent driving assistance, Multi-screen interaction and other functions.
According to the monitoring data of Gaogong Intelligent Automobile Research Institute, in 2022, 11.5292 million passenger cars equipped with digital instrument clusters (7 inches and above) will be delivered as standard in the Chinese market (excluding imports and exports), a year-on-year increase of 14.97%; among them, 8.8546 million units of full LCD screen instruments were delivered, a year-on-year increase of 40.47%.
At the same time, with the adjustment of product structure, in the past three years, the gross profit margin of Tianyou's main business was 17.73%, 23.57% and 32.10%, showing a gradual upward trend.
During the reporting period, the company's sales to the top five customers accounted for 76.02%, 72.87% and 84.42% of operating revenue respectively; among them, sales to Hyundai Motor Group accounted for 10.31%, 23.21% and 53.03% of operating revenue respectively. %.
This means that Tianyouwei has a relatively high concentration of customers, especially the high proportion of sales to Hyundai Motor Group in 2022, and there is a major dependence on a single major customer.
For example, public data shows that in the Chinese market in 2022, Beijing Hyundai's sales have fallen below 300,000 vehicles, while in 2016, this number once exceeded 1 million vehicles.
This is also directly reflected in Tianyouwei's market share data, especially the growth of overseas business, and the shrinking proportion of domestic business, especially self-owned brand customers.
For example, in terms of suppliers of self-owned brand models equipped with digital cockpits (7-inch and above LCD instruments), Magneti Marelli, Desay SV, and Botech rank the top three in the market share of passenger car pre-installation in 2021-2022, while Tianyou For only tenth place.
In addition, the monitoring data of Gaogong Intelligent Vehicle Research Institute shows that from January to April this year, 543,500 new passenger cars equipped with multi-screen screens were delivered in the Chinese market (excluding imports and exports), a year-on-year increase of 64.90%, and the pre-installation rate approached 10%. (Using a key inflection point of rapid growth), reaching 9.61%.
At the same time, in the part of full LCD instruments, the delivery volume of passenger cars in the Chinese market (excluding imports and exports) from January to April this year was 3.0525 million units, and the pre-installation rate exceeded 50% for the first time, reaching 53.95%. Among them, 2,366,600 vehicles were delivered with LCD instruments of 10 inches and above, accounting for 77.53%.
In terms of suppliers of 10-inch and larger LCD instrument assemblies, Continental, Bosch, Visteon, Marelli, and Fudi (self-produced + externally sourced) ranked the top five, with a combined market share exceeding 50%, reaching 53.09%.
The data shows that during the reporting period, the gross profit margin of Tianyouwei's instrument business for export was significantly higher than the gross profit rate of domestic sales; the data shows that the gross profit margin of domestic instrument sales in 2022 was 25.81%, while the export business was as high as 39.18% (mainly relying on the largest customer Hyundai Motor Group).
In addition, from the perspective of the overall market trend, LCD instruments (assemblies) are gradually being replaced by HUD, screen + domain controller. This is an uncertain risk for Tianyouwei, whose main business is automotive instrumentation.
According to the monitoring data of Gaogong Intelligent Vehicle Research Institute, from January to May 2023 in the Chinese market (excluding imports and exports) the delivery of standard cockpit domain controllers for front-mounted passenger cars was 884,600 units, a year-on-year increase of 79.89%, and the front-mounted installation rate was the first Breaking through 10%, reaching 12.00%.
Gaogong Intelligent Automobile Research Institute predicts that this year will still be the year when cockpit domain controllers are accelerated, and the annual installed capacity is expected to exceed 3 million; this means that part of the business of traditional LCD instrument assemblies will be transferred to domain controllers. Controller manufacturer.
At the same time, more LCD panel manufacturers are also gradually seizing the automotive display assembly market. For example, LG, Innolux, BOE, China Star Optoelectronics, etc. This is the general trend of the decoupling of the traditional display assembly market under the domain controller architecture.
For example, BOE proposed a three-step strategy of "display device-display system-smart cockpit" under the opportunity of industrial chain restructuring brought about by the separation of screen and machine. At present, the company's display system business has been appointed by many customers and some of them have been delivered in mass production.
Domain controller manufacturers and even car companies have seized the software business of LCD instruments. Due to the continuous maturity of the cockpit virtualization system, the separation of traditional software (instrument and central control entertainment) and the industrial form of multiple suppliers are being gradually integrated and merged.
In addition, HUD, especially the large-screen W-HUD, AR-HUD technology maturity, cost and optimization of interactive experience, and the necessity of the existence of LCD instruments are also being challenged.
"In the past, everyone used HUD as an assistant, and the driver would return to the dashboard if he had a problem. We hope that HUD is not just an assistant, but a complete replacement of the dashboard, so that the driver only needs to look ahead. "This is the judgment of Li Auto. At present, all models under the brand have been equipped with large-size W-HUD as standard.
From the perspective of industry trends, HUD has been regarded by many car companies as one of the entrances for cockpit information and interaction in the 3.0 era. At the same time, combined with more new display technologies, a fully digital in-cabin interactive experience is realized.
Just at this year's CES show, BMW released the i Vision Dee concept car, which is equipped with a large-size HUD, and at the same time integrates a display system on the front windshield and other glass. BMW Group CEO Oliver Zipse said oversized screens will disappear from cars because they distract the driver.
In particular, the penetration rate of navigation-assisted driving (NOA) is still gradually increasing. This high-end system that combines ADAS and high-precision map navigation, the focus of human-computer interaction is also gradually changing from traditional LCD instruments (not in line with normal safety line of sight) range) to large size W-HUD and AR HUD.
Just in February this year, Desay SV announced a strategic investment of tens of millions of yuan in Chiyun Technology. The two parties reached an in-depth strategic cooperation and will provide competitive AR-HUD solutions for the global market.
At the same time, the overall industry is accelerating its transformation from "IVI + LCD instrument" to "domain control + display" solution. At the same time, HUD will have a considerable impact on LCD instruments, and the value of the industrial chain is entering a cycle of redistribution.