Core views:

The company is a leading domestic heat management air conditioning pipeline, which has profoundly benefited from intelligent electrification; the company has firmly established a “1+2+N” development strategy, and its main business is growing steadily and many new businesses are blossoming:

1. Automobile thermal management air conditioning pipeline basic panel business (“1”): New energy vehicles require higher thermal management system structures. Integration and high pressure are the trend. The bicycle value of pipeline products has increased (heat pump (CO2) > heat pump (other) > PTC > fuel vehicle), and the company's CO2 valve group integration has entered the Volkswagen supply chain and has been targeted by domestic car companies; 2. EGR & automotive hose business (“2”): The company is a mainstream domestic automobile EGR supplier, and has mastered the complete EGR industry chain, and is actively expanding; Air conditioner hose business production capacity, air conditioning hose With air conditioning pipelines, the competitiveness of heat management products has been further improved; 3. Multi-category thermal management single product layout (“N”): gas-liquid separators, electronic water pumps, etc., and individual products have been mass-produced or fixed.

Investment Strategy:

Tamron Co., Ltd. is a domestic leader in thermal management air conditioning pipelines, and we expect revenue of 33.9, 45.2, and 5.51 billion yuan in 2023-2025, net profit of 1.9, 2.5, and 330 million yuan, corresponding EPS: 0.40, 0.52, 0.67 yuan; closing price of 8.16 yuan on March 25, 2024, corresponding PE is 20, 16, and 12 times. Covered for the first time, a “gain” rating was given.

Risk warning: 1) Demand in the car market fell short of expectations, and increased competition exceeded expectations; 2) The company was warned by the Shanghai Stock Exchange in 2021 due to non-operating capital occupation, and there are certain regulatory risks.