(Yicai Global) July 7 -- Shares of Zhongding Sealing Parts soared by the 10 percent daily trading limit after it became a designated supplier of components to Chinese electric car-making giant BYD.

Zhongding Sealing [SHE: 000887] closed 9 percent higher today at CNY12.37 (USD1.91), having hit the upper limit around noon. The benchmark Shenzhen Component Index gained 1.9 percent.

Its unit, Zhongding Rubber Hose Products, has received a notice from BYD saying it will become the designated supplier of parts and components, providing aluminum-alloy chassis components for BYD Auto Industry's NEV platform project, the parent company said in a statement late yesterday.

The total value of the products with a four-year life cycle is expected to reach about CNY282 million (USD44 million). The Anhui province-based company did not provide further details.

The lightweight aluminum-alloy chassis is crucial to improving vehicle performance, the firm said, adding that aluminum-alloy chassis parts the company produces are the core components to ensure the stability and comfort of vehicle operation.

Zhongding Sealing seems to be more bullish on the long-term impact of the order on its businesses, as it will have a limited impact on its financial results. That is because average annual new revenue is just 6 percent of BYD’s business income last year.

BYD’s approval of Zhongding Rubber’s products has laid the foundation for the listed company’s market expansion in the field, the statement said. In addition, it will have a positive impact on the firm’s future developments and performance in the lightweight chassis market.

Zhongding Sealing is the designated components supplier of China’s major emerging electric vehicle startups Nio and Li Auto as well as Tesla.

Editor: Peter Thomas