Chassis business is the cornerstone of the company's performance. The company has been deeply engaged in the field of automotive chassis for 20 years, mainly producing steering gear and shock absorber parts, and has conducted in-depth cooperation with international well-known parts suppliers such as Bosch, Zaifu, Nestor, Wandu MANDO for many years, and indirectly entered the supply system of global mainstream joint ventures and independent brands. The company is absolutely leading in the domestic steering gear rack and shock absorber piston rod segment industry, maintaining a dominant position in the market segment for many years in a row, and the chassis business continues to provide the company with stable cash flow.

"Commercial + passenger" two-wheel drive, air-conditioning compressor business ushered in a turnaround. 1) Commercial vehicle compressor business bottomed out and rebounded. The company's air-conditioning compressor customers are mainly BAIC Foton, Sinotruk and other commercial vehicle customers. In 22 years, due to the epidemic in Shanghai, commercial vehicle sales continued to decline and other factors, 22H1 air-conditioning compressor revenue of 204 million yuan,-45% year-on-year. At present, the domestic epidemic policy has been liberalized, the economy has steadily recovered, and commercial vehicle sales are expected to pick up, coupled with the introduction of a public domain vehicle electrification policy to accelerate the process of new energy for commercial vehicles. The average value per car of commercial electric compressors (1500 yuan) is significantly higher than that of mechanical compressors (500yuan). 2) passenger car compressor business benefits from the rapid growth of new energy. The company actively arranges new energy passenger car compressor products, and has now been designated by Cyrus, Zero and other new energy vehicle companies. in addition, the company is making great efforts to expand other new energy vehicle enterprises. in the future, passenger compressor business is expected to benefit from the rapid growth of electrification.

Aluminum forging lightweight from 0 to 1, binding large customers grow rapidly. In terms of lightweight aluminum forging business, the company has the ability to produce lightweight aluminum forging parts such as front steering knuckle, rear steering knuckle, upper control arm, lower control arm, two-point arm, three-point arm, bracket, anti-collision beam, battery package connector, air-conditioning valve plate, yoke, etc., and formally mass produced air-conditioning valve plate and yoke in 22 years. At present, the company has begun to supply BYD with valve island products, covering the whole platform of new energy models. BYD's volume is expected to lead to the rapid growth of the company's aluminum forging business in the future.

Investment suggestion: as the company's compressor production base is located in Shanghai, the company's profits are expected to decline in 22 years due to the epidemic in Shanghai, and the profit base in 22 years is low. We believe that the chassis business of the company is expected to grow steadily in the future, the air conditioning compressor business benefits from the deregulation of the epidemic policy and the bottoming of bus electrification policy, and the large customers bound with aluminum forging lightweight products are growing at a high speed. It is estimated that the return net profit in 2022-2024 is 57 million yuan, 112 million yuan and 128 million yuan respectively, EPS is 0.16,0.31,0.36 yuan respectively, corresponding to PE is 47 times, 24 times, 21 times. For the first time, coverage gives an "overweight" rating.

Risk hints: macroeconomic fluctuation risk, market competition risk, raw material price fluctuation risk, technological innovation, new product development uncertainty risk, new energy vehicle sales less than expected risk.