The company's 2021Q3 performance was lower than expected. In the first three quarters of 2021, the company achieved revenue of 2.958 billion yuan, + 27.45% compared with the same period last year, and net profit of 101 million yuan,-32.23% compared with the same period last year. Of this total, 202Q3 achieved revenue of 948 million yuan in a single quarter, + 11.23% of the same period last year, and net profit of 6 million yuan,-92.06% of the same period last year. The large and medium-sized passenger business is affected by the continuous downturn of downstream government public transport procurement expenditure, and the business continues to be under pressure; the car business is mainly affected by the lack of core and superimposed high-temperature vacation in the downstream mainframe factory, and the shipment is lower than expected. The company's Q3 single-quarter gross profit margin was 23.19%, year-on-year-7.65pcts, mainly due to the increase in the proportion of small car business revenue and the pressure on large and medium-sized passenger business.

The company's Q3 single-quarter expense rate is 23.0%, year-on-year + 1.81pcts, of which sales expense rate is 11.41%, year-on-year + 0.58pct; management expense rate is 5.41%, year-on-year + 0.78pct; R & D expense rate is 6.33%, year-on-year + 0.9pct; basically the same as the same period last year.

Large and medium-sized passenger business Q4 is expected to improve marginally, and the energy storage business is progressing smoothly. Due to the impact of the epidemic, government-side public transport procurement has decreased, and the company's large and medium-sized passenger business has declined significantly. The company's Q3 large and medium-sized passenger business continues the trend in the first half of the year, and its performance remains under pressure. Q4 is expected to resume government-side public transport procurement with the holding of events such as the Winter Olympic Games, and the business is expected to improve marginally. The company's energy storage business is progressing smoothly. In the first half of 2021, the company won orders for thermal management products of various models of energy storage batteries from customers such as Ningde Times and Vision Energy. Q4 began to supply and contribute revenue, and the revenue contribution is expected to reach more than 30 million. With the rapid growth of energy storage power stations, relying on the accumulation of battery thermal management technology of large and medium-sized customers, the company continues to promote the mass production of energy storage thermal management liquid-cooled products. It is optimistic about the development of the company in the field of thermal management of energy storage power stations.

Car thermal management business has plenty of orders on hand, and the profit improvement trend remains unchanged. Since 2019, the company has adhered to the business strategy of "taking advantage of business at the same time". Since then, the car hot management business has been continuously developed, from loss to profit and profitability continues to improve. The company's commercial vehicle business, especially construction machinery air-conditioning products, accounts for an increasing proportion of sales. at present, the main customers are advanced construction machinery manufacturers such as Sany, Xugong, Futian and Shaanxi Automobile. In terms of passenger cars, the company continues to obtain high-quality independent and joint venture brand customers, as well as air-conditioning box projects for many models, such as NIO Inc. Automobile, Ford, SAIC GM, BYD, Changan Automobile, Jianghuai Automobile, SAIC GM Wuling and so on. Mass production is expected next year. At the same time, the company entered the supply chain system of Volkswagen and Honda through the acquisition of Jingbin Ocean. The company's new orders in the first half of the year exceeded 2.5 billion yuan, and there are plenty of orders on hand.

Risk factors: the prosperity of the automotive industry is declining; the progress of product research and development is not as expected; the expansion of new products and new customers is not as expected.

Investment suggestion: the company is the leader of domestic large and medium-sized bus thermal management, Q3 performance pressure is mainly due to large and medium-sized passenger business in the off-season, car business affected by lack of core. The company's Q4 operation is expected to improve month-on-month, and energy storage thermal management products have been designated by customers such as Ningde era and Vision Energy, which is expected to bring significant improvement to performance and valuation. Considering the impact of the boom in the large and medium-sized passenger industry and the lack of cores in cars, the EPS forecast for 2021 is lowered to 0.26 yuan (the original forecast is 0.40 yuan), and the forecast of EPS for 23 years in 2022 is maintained at 0.42 won 0.53 yuan, the target price is maintained at 9.9 yuan, and the "buy" rating is maintained.