On December 24, the company issued an announcement that the company paid 83.5 million yuan of 55% of the consideration of Jingbin Ocean to KTT, the former shareholder of Jingbin Ocean, which was lower than the asset evaluation value determined in the Asset Evaluation report, and the resulting investment income will have a positive impact on the company's operating performance in 2020. At this point, the company and KTT have fulfilled all the conditions for delivery. After the delivery is completed, the company will become the controlling shareholder of Jingbin Ocean, which is expected to further break through the supply chain of Volkswagen and Honda. The company is currently at the bottom of the business cycle, and the business structure continues to be optimized, maintaining the company's forecast of 0.31 EPS in 2020-21-22, 0.42 plus 0.52 yuan, and maintaining the "buy" rating.

Jingbin Ocean has completed its acquisition and delivery, and its operation has continued to improve. On December 24, the company issued an announcement that the company paid 55% of the consideration of 83.5 million yuan to Jingbin Ocean KTT, the former shareholder of Jingbin Ocean, to complete the acquisition of Jingbin Ocean. The final transaction consideration is lower than the asset evaluation value determined by the Asset Evaluation report, and the resulting investment income will have a positive impact on the company's operating performance in 2020. At this point, the company and KTT have fulfilled all the conditions for delivery. After the delivery, the company will become the controlling shareholder of Jingbin Ocean, and is expected to further break through the supply chain of Volkswagen and Honda through Jingbin Ocean.

The customer structure is optimized, and the management has hit bottom. Since 2019, the company has adhered to the business strategy of both passengers and businessmen, focusing on the development of commercial vehicles, especially construction machinery air-conditioning business, and the proportion of air-conditioning business of commercial vehicles has gradually increased. At present, the company's commercial vehicle customers have Sany, Xugong, Futian and Shaanxi Automobile and other advanced construction machinery manufacturers. With high-quality product quality and fast service response, the company won the best cooperation award of Sany Group Strategic Alliance and the excellent supplier of Sany pump. In terms of passenger cars, the company mainly supplies condensers, air-conditioning boxes and other products such as water-cooled plates to customers, the customer structure is constantly optimized, and the company continues to eliminate lower-end passenger car customers and gradually expand into high-quality independent and joint venture brand customers. At present, the main customers of the company's passenger car business include Jianghuai, Changan, SAIC GM Wuling, SAIC passenger cars, etc.; it is the supplier of condenser assembly, air conditioning box assembly and heater assembly of Wuling Hongguang MINIEV.

Continuous investment in R & D and rapid expansion of new business. Since 2014, the company's annual R & D expenditure has been more than 150 million yuan; in terms of patents, the company is the drafting unit of industry standards for automotive air-conditioning products, and the vehicle air-conditioning R & D technology is ahead of its domestic counterparts; as of the end of June 2020, the company has 540 national patents. And the company has Shanghai Songzhi Experimental Center and Jianghuai Songzhi Experimental Center two nationally recognized qualified laboratories. The company invested 150 million yuan in 2018 to build an international advanced ring mold wind tunnel laboratory to speed up the cooperative development with a number of vehicle factories. The company is a leading enterprise in the field of large and medium-sized bus air-conditioning, with iterative air-conditioning products, leading product technology and high share stability. The new business of battery thermal management cooperates with the air-conditioning business and continues to provide increment. In terms of cold chain business, after the acquisition of Lumikko, the company localized its technology and products, and solidly promoted the business of refrigeration units, including the transportation of products such as drugs, fruits and vegetables, fully benefiting from the rapid growth of cold chain transport demand in the later stage of the epidemic.

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: as a leading enterprise in the production of mobile air conditioners in China, the operation of the company is constantly improving. The passenger structure of the passenger car business is gradually optimized, and the quality independent and joint venture customers are constantly expanding. At the same time, the company acquired Jingbin Dayang this year to further expand the customers of Volkswagen and Honda. The commercial vehicle business continues to expand, and the construction machinery business is developing rapidly. Large and medium-sized bus business to maintain a high share of stability, downstream bus prosperity is expected to pick up; and the rapid growth of new energy thermal management business, thickening the company's performance. The company is currently at the bottom of the business cycle and is expected to improve in the future. Maintain the company's annual EPS forecast of 0.31 EPS in 2020-21-22 and maintain the "buy" rating.