Yanfeng International Automotive Technology Co. Ltd.

Overview Key strengths Key risks Strong position in the global auto interior parts market. Stalling auto sales recovery amid harsher global economic conditions. Diversified geographical presence globally, and established relationships with leading auto original equipment manufacturers (OEMs). Pandemic-related inefficiencies and increased raw material costs will constrain margin recovery. Low debt leverage. We expect flat global light-vehicle sales and moderate production growth of 3%-4% in 2022. Regional sales will likely be divergent with worsening conditions in the U.S. and Europe, counterbalanced by a more resilient Chinese market, where we expect 4%-6% sales growth this year. We attribute growth in China to the government stimulus policy. These policies include a purchase tax cut for internal combustion engines (ICE) vehicles and strong regional

... Ltd. (YFI)'s revenue growth will outperform the industry in 2022. We expect flat global light-vehicle sales and moderate production growth of 3%-4% in 2022. Regional sales will likely be divergent with worsening conditions in the U.S. and Europe, counterbalanced by a more resilient Chinese market, where we expect 4%-6% sales growth this year. We attribute growth in China to the government stimulus policy. These policies include a purchase tax cut for internal combustion engines (ICE) vehicles and strong regional incentives, such as a license quota increase in 10 provincial-level regions and subsidies for car purchases. With about 50% revenue exposure to China, YFI is set to benefit from the sales recovery in the market. The company's revenue increased by 12.7% in the first half of the year. As such, we estimate its revenue will grow by 7%-10% in 2022. This high growth is likely to decelerate to 3%-6% in 2023 as a result of China's continuing...

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