This report is read as follows:

Led by core customers such as Chery, Jianghuai and BYD, the company's passenger car business is expected to accelerate growth; with the recovery of sales in the heavy truck industry, the company's commercial vehicle business is expected to gradually reduce losses.

Main points of investment:

The target price is 24.64 yuan, covering for the first time to give an overweight rating. It is estimated that the company's EPS in 2023, 2024, and 2025 will be 0.88, 1.14, 1.49 yuan and 24.64 yuan, corresponding to about 28 times PE in 2023, the first overweight rating.

Car body punching and welding parts are the main driving force of performance, and profitability has continued to improve since 2022. The company's main business is body and chassis stamping welding parts, which can supply commercial vehicles and passenger vehicles, of which body parts account for 68% of revenue, which is the main driving force of the company's performance. The company's homing net profit has grown rapidly since 2022, with 2022 year-on-year + 62.71% dome 2023H1 year-on-year + 127.04% to 90 million yuan, close to the level for the whole year of 2022.

Chery and Jianghuai will become important engines of the company in the future. The company's share of Chery sales increased from 13.95% to 16.94% in 2019-2022, and its profitability was above average. In 2023, Chery's export performance is outstanding and the new car will be launched in partnership with Huawei, which is expected to become an important engine for the company in the future:

Jianghuai is the company's largest customer, with Anhui Volkswagen and other new models on the market will also bring important increments for the company.

Commercial vehicle sales ushered in a recovery, the company's corresponding business is expected to gradually reduce losses. Affected by the decline of the commercial vehicle scene, the company's commercial vehicle business was in a state of loss in 2022, and the three subsidiaries that provided matching services to commercial vehicle customers lost a total of more than 70 million yuan. The demand for commercial vehicles began to recover in 2023. Sales of commercial vehicles and heavy trucks increased by 16.08% and 29.38% respectively from January to July compared with the same period last year, and the company's commercial vehicle business is expected to gradually reduce losses.

Risk tips: downside risks of major customer sales; less than expected risks of commercial vehicle recovery, etc.