The company released its 2022 semi-annual results forecast: 1H23 is expected to achieve net profit attributable to shareholders of listed companies of 197-223 million yuan, an increase of 50.4% to 70.3% over the same period last year, deducting non-net profit of 201-230 million yuan, an increase of 40.4% to 60.5% over the same period last year.

Benefiting from the strong recovery of the truck market, 2Q22 company's performance is expected to improve year on year, 2Q23 expects to achieve net profit attributable to shareholders of listed companies of 92 to 118 million yuan, up 147.7% to 217.6% year on year, -12.2% to +12.6% month on month, and 2Q23's non-net profit is expected to be 1.02 to 131 million yuan, up 109.9% to 170.3% year on year, up 2.7% to 32.3% month on month.

According to data from the China Automobile Association, the cumulative wholesale sales volume of heavy trucks from January to May 2023 was 449,000 units, a year-on-year increase of +20.3%. The cumulative wholesale sales volume of light trucks was 775,000 units, +10.6% over the same period. Benefiting from the improvement of the domestic economy and the increase in demand in overseas markets, the company achieved good growth in demand in the domestic heavy truck industry and the growth of overseas export business in the first half of 2023. Furthermore, the company adopted various measures to control costs and expenses, improve capacity utilization, improve production capacity utilization rate, improve quality and efficiency significantly, and increase profitability significantly.

Commercial vehicle crankshaft faucets open up a second intelligent battleground

1) The company has a leading market share in the field of truck engine crankshafts and connecting rods, and has excellent customer resources. The company's crankshaft and connecting rod products are Weichai Power, Cummins, FAW Xichai, Foton Motor, etc. The overall market share of the heavy truck market has remained at 60% for a long time, and the light truck market share is 30%, making it a leader in the industry.

2) Embrace intelligence and develop the second main business of airborne suspension. The company has achieved self-manufacturing of the core components of the air suspension system, such as air springs and CDC shock absorbers, and has mature system design capabilities.

In 2022, Tianrun Intelligent Control Company successfully developed 13 new customers and completed the development of 44 new products for air suspensions and related components, including 13 semi-trailer air suspensions, 6 air suspensions, 7 chassis parts, 1 heavy rubber suspension, and 17 high-end after-sales parts. In terms of air suspension production capacity, the company has an annual production capacity of 100,000 sets of chassis suspension systems, 300,000 sets of air springs, 400,000 shock absorbers, and 300,000 sets of various valves. Currently, the air suspension penetration rate of trucks is still low. Combined with regulations such as “Technical Conditions for Motor Vehicle Operation Safety” on mandatory requirements for air suspension trucks, the air suspension market is expected to expand at an accelerated pace. We believe that in the context of the recovery of the commercial vehicle market, the company's air suspension business, which relies on cost advantages and high-quality traditional business customer resources, is expected to enter a period of rapid growth.

Investment advice: We expect the company to achieve operating income of 4.19 billion yuan, 4.91 billion yuan and 5.63 billion yuan in 2023, 2024 and 2025, corresponding net profit of the parent company of 420 million yuan, 600 million yuan, and 850 million yuan. Based on today's closing price, PE is 18 times, 12 times, and 9 times, covering a “buy” rating for the first time.

Risk warning: commercial vehicle sales fall short of expectations, airborne penetration rate falls short of expectations, intelligent development falls short of expectations, automotive industry policies fall short of expectations.