The leading non-tire rubber parts company, has maintained strong profitability with “vibration damping and noise reduction” and “sealing systems”, and has been deeply involved in non-tire rubber parts for many years, ranking among the “top 20 global non-tire rubber products”. In 2008, the path of overseas mergers and acquisitions began, successively acquiring leading international non-tire rubber parts companies such as American Cooper, American Acushnet, German KACO, and German WEGU. With overseas technical support and high technical barriers, the company's shock absorption and noise reduction and sealing system business has shown strong profitability.
Air suspension: Introduce AMK core technology and gradually achieve the strategic goal of “overseas acquisition, domestic landing”. Through the acquisition of German AMK, combined with independent research and development, the domestic air suspension market was successfully developed. AMK has been deeply involved in air suspensions for many years, producing equipment for OEMs such as Jaguar Land Rover, Volvo, Audi, Mercedes-Benz, and BMW. At the same time, AMK China was established domestically, and it has become a core supplier for leading new forces and first-line independent brands.
In addition, the company independently develops air springs to enhance the value of bicycles, and has received orders from domestic OEMs.
Cooling system: Using the advantages of TFH technology to expand the domestic cooling system market TFH is a leading enterprise in the engine cooling and new energy vehicle battery cooling industry. The value of cooling system products for bicycles has increased from about 300 yuan for traditional fuel vehicles to nearly 1,000 yuan for new energy vehicles, and extended-range new energy vehicles have reached about 1,500 yuan. Through the acquisition of TFH, we have increased our cooling system business revenue by leveraging our rich experience in fluid pipelines and grasping domestic NEV development trends.
Lightweight chassis: Form a “parts” to “component” product upgrade with the vibration damping and noise reduction business. In 2019, the company acquired Wangjin, Sichuan, and mastered the core technology of ball heads, filling the technical gap for lightweight chassis parts. Combined with vibration damping and noise reduction products, the company has complete technology to produce forged aluminum control arm assemblies. At present, it has received orders from many traditional OEMs such as Mercedes-Benz, Changan, Guangzhou Automobile, and BYD.
Continuing to promote cost control in overseas factories, refined management is expected to improve profitability. The company will reduce personnel, control costs, and optimize costs for overseas enterprises, and continue to focus on core businesses to enhance enterprise competitiveness. Further strengthen management export and cultural export, and a new executive team will act as global CEOs of the five major divisions to strengthen cost control and enhance profitability of overseas companies.
Profit forecasting and valuation
The company's 2024-2026 revenue is estimated to be 199.05/226.47/25.536 billion yuan, YOY 15.4%/13.8%/12.8%; 2024-2026 net profit to mother is estimated to be 1,435/16.68/19.28 billion yuan, YOY 26.8%/16.3%/15.5%, EPS 1.09/1.27/1.46 yuan/share, corresponding PE is 11.24/9.67/8.37 times. First coverage, giving a “buy” rating.
Risk warning
Raw material costs have risen; the growth rate of new energy vehicles has fallen short of expectations; gross margins are under pressure due to increased competition among automakers; optimization of overseas factory management falls short of expectations; the impact of overseas import and export policies, etc.