Incident Overview

The company released its 2024 semi-annual report, with revenue for the first half of 2024 of 1.736/0.115/0.108 billion yuan, +16.29%/+48.82%/+51.44% year on year; 2Q24 revenue/net profit attributable to mother/ net profit deducted from non-mother 0.877/0.058/0.053 billion yuan, respectively, +7.63%/+44.79%/+39.21% year on year.

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1. 2024H1's revenue is steady, moderate and positive, and new energy is driving a sharp rise in the volume and price of the thermal management business. Production and sales of 2024H1 new energy vehicles were 4.929 million units and 4.944 million units, respectively, up 30.1% and 32% year-on-year, respectively. Compared with traditional fuel vehicles, new energy passenger vehicles have greatly increased in value, and improved product and customer structures have driven up profitability. 2024H1, the company's NEV thermal management revenue was 0.604 billion yuan, accounting for 59.36% of the thermal management system revenue.

2. The gross margin has been rising steadily, and the net profit margin has increased dramatically. 1) Gross profit margin: gross margin for the first half of 2024 was 21.64%, +0.41pct; 2) Expense ratio: three-fee rate was 4.72%, -0.56pct year on year, +0.30pct year on year; 3) Net profit margin was 7.80%, +1.51 pct year on year; 4) ROE (weighted): ROE (weighted) was 5.31%, year on year +1.38pct.

3. Integrated modules are being developed at an accelerated pace, and the thermal management product matrix is becoming more and more rich. Starting with the European Volkswagen carbon dioxide heat pump valve integrated module project, the company officially achieved mass production and supply of European Volkswagen valve integrated modules in September 2023; at the same time, it carried out in-depth research and development of carbon dioxide high-pressure pipelines, which is progressing smoothly. The company's thermal management product layout is becoming more and more rich, and heat management items such as gas-liquid separators, electronic water pumps, and plate heat exchangers have been supplied in batches.

4. Accelerate the layout of overseas markets, and go hand in hand with deep domestic cultivation and foreign expansion. 1) Leveraging the role of the Polish factory as a bridgehead in Europe, there was a marked increase in orders for the simultaneous development of new overseas models and products; 2) Malaysia's new investment plan to form air conditioning pipeline production capacity covering Southeast Asia while supporting upstream aluminum tube product plans; 3) According to subsequent layout plans in Europe and mass production plans for new OEMs such as Stellantis, the Moroccan factory preparation work was carried out to further improve and optimize the overseas market layout.

Investment advice

Tamron Co., Ltd. is a leader in domestic heat management air conditioning pipelines, and new businesses have blossomed. Driven by the trend of exports, integrated thermal management products, and domestic replacement of traditional pipelines, the performance growth rate is expected to maintain rapid growth over the next three years. Based on this, we maintain the profit forecast; we expect 2024-2026 revenue to be 4.53, 5.51, 6.78 billion yuan; 2024-2026 net profit of 0.28, 0.33, 0.43 billion yuan; EPS of 2024-2026 is 0.57, 0.66, 0.88 yuan; closing price on August 22, 2024 is 6.71 yuan, corresponding to 2024-2026 PE of 12.03, 10.31, 7.82 times; maintain” “Gain” rating.

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 the use of non-operating capital, and there are certain regulatory risks.