The company's annual 21H1 income is 280 million yuan,-27.5% compared with the same period last year, and the net profit is 39 million yuan, 45.8% year-on-year, and 35 million yuan, 49.3% compared with the same period last year. 21Q2, the company achieved income of 150 million yuan, year-on-year-32.7%, return to the mother net profit of 0.16 yuan, year-on-year-62.8%. Due to the lack of core of downstream car factory customers led to a decline in production scheduling, the company's 21H1 performance declined. We downgrade the company's annual net profit forecast for 2021-22-23 to $320 million (originally estimated at $1.8 billion), maintaining the target price of $35 and maintaining the "buy" rating.

Orders for automation equipment business resumed in the first half of the year, but the settlement period was longer. The revenue of the automation equipment business 21H1 reached 130 million yuan,-29.9% compared with the same period last year. Business orders for automation equipment began to resume from 20H2, and 21H1 signed a new order of 260 million yuan, + 85% compared with the same period last year. However, as most of the order settlement cycle is more than half a year, 21H1's revenue is still under pressure. The net profit of the automation equipment business 21H1 is 22 million yuan,-59.2% year-on-year, and the net interest rate is 16.7%, year-on-year-12.1pcts. We expect 21H2 to begin and the automation equipment business will gradually resume with the delivery of on-hand orders.

Downstream customers lack of core, auto parts business was hit in the first half of the year. Auto parts business 21H1 achieved revenue of 150 million yuan,-25.3% of the same period last year. 21H1, a worldwide shortage of automotive chips, has led to a reduction in the production of downstream customers and a decline in the company's parts business. The net profit of the auto parts business 21H1 is 19 million yuan,-33.1% year-on-year; the net interest rate is 12.5%, year-on-year-1.4pcts.

Carbon dioxide air conditioning pipeline business is ready to start. Carbon dioxide heat pump air conditioning system is an important development direction of new energy vehicle thermal management system, which has outstanding advantages in environmental protection and low temperature life. The carbon dioxide high pressure pipeline system (refrigerant conduit) independently developed by the company has passed the certification of Volkswagen MEB platform and entered the stage of pre-batch production and supply. The company will expand the production capacity of the product and promote it to more customers. Around the thermal management system, the company is also actively developing high-pressure electronic expansion valves, globe valves, pressure relief valves and other new products.

Risk factors: the risk that the lack of core of downstream customers can not be improved in the short term; the risk that new products such as air-conditioning pipelines cannot be approved by customers; the risk that the settlement progress of orders for automation equipment is not as expected.

Investment advice: taking into account the decline in 21H1 performance, we lowered the company's annual net profit forecast for 2021-22-23 to 1.3 billion yuan (the original forecast was 1.8 million yuan), and the share price is now trading at 56-33-24 times the corresponding PE. With reference to the valuation levels of the automation equipment industry and the new energy auto parts industry, we value the company's 2022 performance at 40 times PE, maintaining the target price of 35 yuan and maintaining the "buy" rating.