Everbright Securities: Covering Botai Auto Federation (02889) for the first time to continue upgrading the “buy” rating industry to high-end

The Zhitong Finance App learned that Everbright Securities released a research report stating that Botai Auto Federation (02889) is a leading supplier of smart cockpit solutions in China. The company is expected to enter the overseas OEM supply chain through international customers such as Porsche, and overseas revenue is expected to become the second growth curve. Compared with mature automotive supply chain companies, it has a “software and hardware integration” advantage and a high revenue growth rate. It is expected to expand market share with technological and ecological advantages. First coverage, giving a “buy” rating.

The main views of Everbright Securities are as follows:

Company introduction

Botai Auto Union was founded in 2009, formerly known as Shanghai Botai Yuezhen Electronic Equipment Manufacturing Co., Ltd., and listed on the main board of the Hong Kong Stock Exchange in September 2025. In terms of shipment volume in 2024, the company ranked third among China's smart cockpit domain control suppliers (market share 7.3%); in terms of shipments from January to May 2025, it ranked second in China's NEV passenger car cockpit domain control market (13.11% market share). The company is one of the few senior full-stack solution providers in China that can deliver Qualcomm 8155/8295 on a large scale and provides Kirin 9610A+ Hongmeng solutions. Its business covers 29 mainstream OEM customers across the country, including leading domestic car companies such as FAW, Dongfeng, SAIC and international brands such as Porsche. The core product domain controller has served leading customers such as Changan Avita and Dongfeng Rantu. The company's revenue in 2024 was 2,557 billion yuan, of which smart cockpit solutions and connected services accounted for 95.5%/4.3% of revenue; revenue for the first half of 2025 was 1,086 billion yuan, with smart cockpit solutions and connected services accounting for 95.7%/4.1% of revenue respectively, and the revenue structure continued to be optimized.

The smart cockpit industry exceeds 100 billion dollars and still has high growth potential. The industry continues to upgrade to high-end

According to Insight Consulting data, the market size of smart cockpit solutions for passenger cars in China will increase from 129 billion yuan in 2024 to 299.5 billion yuan (CAGR 18.4%) in 2029, with a penetration rate of 97%. Industry development presentation: 1) Policies and requirements are two-wheel drive, and personalized and scenario-based requirements continue to drive technology iteration; 2) Domain control penetration rate is rapidly increasing. As the “brain” of the smart cockpit, the penetration rate will reach 44.1% in 2024, and the penetration rate is expected to exceed 90% in 2029; 3) two-line technology route breakthroughs, AI models drive domain controller upgrades, and end-side deployment can solve the three pain points of delay, privacy, and offline services; the integrated cabin driving route is expected to mature, using a single computing unit to integrate multiple domains to reduce hardware redundancy and achieve cost optimization.

The company's “full-stack technology+high-end product+ecological collaboration” triple collaboration achieves leading competition in the industry

Smart cockpit solutions account for a steady share of revenue. In terms of profit, gross profit in 2024 was 301 million yuan (+30.3% year over year). Profits continue to improve. The core stems from the three pillars: 1) Full-stack technology to build barriers: self-developed “software+hardware+cloud” integrated solutions to support “one vehicle, one solution”; the cumulative number of patents exceeded 6,000 by 2024 (80% of invention patents), R&D investment exceeded 700 million yuan in 2024, and the R&D team reached 709 people as of the end of May 2025. 2) High-end products: The number of high-end smart cockpit solutions equipped with Qualcomm 8295 chips in China is the highest. The new-generation Snapdragon 8397 platform solution has been designated for mass production by leading Chinese car companies; at the same time, there are a few suppliers that provide Kirin 9610A+ Hongmeng solutions. If Huawei's “Hongmeng Zhixing” models are shipped in volume in 26-27 years, the company is expected to benefit deeply. 3) Strong ecological collaboration: Shareholders include Tianjin Jinmi (the controlling party behind it is Xiaomi, holding 5.17% shares), Guangzhou Pingan (holding 3.89% shares), etc., forming a collaborative network of “car company orders+ecological resources+financial support”.

Profit forecasting and valuation

The bank predicts that the company's revenue for 2025-2027 will be 3,584 billion yuan, 5.664 billion yuan, and 8.761 billion yuan respectively, up 40%, 58%, and 55% year-on-year. The corresponding 2025-2027 PS will be 7.5x, 4.7x, and 3.1x, respectively. The company's PS valuation is higher than the average PS valuation level of comparable companies. Combined with relative valuations, based on: 1) The company cooperated closely with leading upstream and downstream companies such as Qualcomm and Huawei, and ranked third in the domestic cockpit domain control market share in 2024. It has successfully entered the core supply chain system of leading NEV companies, and is expected to expand its market share with technical & ecological advantages; 2) Compared with mature automotive supply chain companies, the company has a “hard and soft” advantage and high revenue growth rate, which can give a certain PS valuation premium; 3) The company is expected to enter the overseas OEM supply chain through international customers such as Porsche, and overseas revenue is expected to become the second growth curve. The company has certain target scarcity and premium space.

Risk warning: Demand for smart cockpits falls short of expectations, technology iteration falls short of expectations, supply chain risks, and the risk of IPO price fluctuations.