Q2 revenue performance increased steadily, strict control of expenses, cost reduction and efficiency 1) Q2 in 2023, the company realized revenue of 815 million yuan, year-on-year + 61.03%, month-on-month + 20.37%; realized net profit of 40 million yuan, + 47.06%, + 8.60%; realized non-return net profit of 38 million yuan, + 53.35%, + 16.25%. The company's 2023H1 gross profit margin is 21.23%, year-on-year-1.11pct, net profit 6.29%, year-on-year-0.14pctten 2023 Q2 gross profit margin is 20.21%, year-on-year-2.17pct, month-on-2.24pct, net profit rate is 6.06%, year-on-year-0.88pct, month-on-0.51pct. The company achieved a large increase in operating income in the first half of the year, mainly due to the increase in revenue from thermal management system products and the increase in the proportion of new energy revenue, as well as the increase in sales revenue from EGR products. 2) in 2023 Q2, the company's sales / management / finance / R & D expense rates were 2.05% 4.96% mai 0.41% Accord 4.81%, year-on-year-0.24/-0.63/-2.14/-0.67pct, the company strictly controlled the cost ratio, improved the automation of the production line and other measures to improve the production line production level, management level and quality control level to achieve cost reduction and efficiency.

Actively expand the market of new energy vehicles and speed up the strategic layout of integrated thermal management based on the substantial increase in the value of new energy passenger vehicles compared with traditional fuel vehicles, the company ploughs the market of new energy vehicles. In 2023, H1, the company's new energy vehicle thermal management products achieved revenue of 474 million yuan, accounting for 51.84% of the revenue of thermal management system parts, and has realized the conversion from providing a single product to providing a complete set of heat exchange solutions. The layout of the company's thermal management product line is becoming more and more abundant, expanding from traditional thermal management components to new energy thermal management products, and developing in the direction of thermal management integration, which will increase the value of bicycles and the gross profit margin of the company's products. After the new energy vehicle thermal management integration module and core parts project reach production, the company can form an annual production capacity of 2.45 million sets (pieces) of new energy vehicle thermal management integration module and other core components. The implementation of the project will greatly strengthen the company's leading position in the field of thermal management of new energy vehicles.

Improve production capacity and project layout, continue to strengthen R & D capacity building 2023H1, the company steadily promotes the construction of new capacity projects in Anhui, Guangdong, Hubei and other places to improve the production capacity of superior air-conditioning pipeline products. The company plans to build a new rubber mixing center and air-conditioning hose production line in Tianyuan, Shandong Province. after reaching production, it will form 6000 tons / year mixed rubber production capacity and 1000 million meters / year air-conditioning hose production capacity.

In 2023, the R & D expenditure of Q2 company was 39 million yuan, which was + 41.36% compared with the same period last year, and the R & D expenditure rate was 4.81%. The company continues to increase R & D investment, some of the R & D products have passed customer verification, completed production line installation and commissioning and has the capacity of mass production. The wireless charging protocol independently developed by McGee, a subsidiary of the company, can use general MCU to build wireless charging products, which has been matched for Geely, Great Wall and other mainframe factories.

Profit forecast and investment rating New Energy vehicle thermal management integration trend is highly deterministic, the steady progress of production capacity construction will meet the company's thermal management and hose business growth needs, and the product matrix will continue to improve. Compared with the previous profit forecast, as the company achieved a two-way breakthrough in products and technology, accelerated the transformation of new energy, successfully expanded the customer matrix, and improved operational efficiency, we raised our profit forecast. the company is expected to achieve main business income of 33.44,41.08 and 5.028 billion yuan from 2023 to 2025, an increase of 25%, 23% and 22% year-on-year. Achieve net profit of 2.11,2.72 and 343 million yuan, with an increase of 71%, 29% and 26% compared with the same period last year. EPS is 0.43,0.55 and 0.70 yuan respectively. The PE valuation of the previous share price is 16,13 and 10 times, respectively. We are optimistic about the company's future performance growth and maintain the "overweight" rating.

Risks suggest that downstream car sales are not as expected; raw material prices continue to rise; project research and development progress is not as expected; customer expansion is not as expected; market competition tends to be fierce.