The company's long-term and short-term development logic is clear. Short-term performance depends on the improvement of Grammer's performance. The medium- to long-term performance growth points depend on the rapid development of the company's passenger car seat assembly business in the domestic market and the gradual expansion of various new businesses, and continues to be optimistic about the company's leading attributes and growth attributes.

Product upgrade+global layout, leading seat components are operating step by step and moving steadily and far-reaching. The company is the leading global seat headrest segment, with a global market share of over 25%. Over the past 23 years, the company's passenger car seat business has accelerated breakthroughs, and has successfully achieved mass production in the passenger car seat assembly business. It is expected that in the future, it will continue to increase the global market share of the passenger car seat business with its long-accumulated industry reputation, extremely high product cost performance, and rapid market responsiveness. Over the past 24 years, the company has been straightened out, and Grammer will further systematically adopt measures to improve efficiency and reduce costs, fundamentally driving the recovery of profitability in the main business. In addition, Grammer has also helped the company begin the globalization of passenger car seat assemblies and open up room for long-term performance growth.

Passenger car seats: Future industry pattern improvement+the company's competitiveness will continue to stabilize, and the market share will steadily increase.

(1) At the industry level, the automotive industry pattern continues to evolve, which in turn spawns changes in the upstream supply chain pattern and the trend of domestic substitution is accelerating. Furthermore, additional functions such as zero-gravity seats, seat massage, and heating will continue to penetrate, which will drive the value of the product to increase. (2) At the company level, the company has obtained targeted projects for new forces, overseas luxury and joint venture brands. There are sufficient number of designated projects. As of July 31, 2024, the company had a total of 18 passenger car seat targets; in terms of production base layout, the company's Hefei base (Phase I) and Changzhou base have been completed and put into operation as scheduled, and several domestic bases are still being laid out and put into construction according to plan.

Grammer integration: management change+cost reduction and efficiency+asset integration to enable profitability to return to healthy growth.

After the company officially acquired Grammer in 2019, the two have the possibility of 1+1>2 through resource integration. For Ji Feng, in 2021, the company successfully entered the passenger car seat field using Grammer's experience in commercial vehicle seat assemblies, and Grammer's subsequent role in the globalization of the company's passenger car seats was irreplaceable. For Grammer, using Ji Feng's geographical advantages and customer advantages to continuously develop new businesses in the Asia-Pacific region, Grammer achieved rapid growth in revenue in the Asia-Pacific region, and maintained a high level of EBIT margin.

In terms of asset integration, in 2024, the company entered the deep-water zone of Grammer's reforms and plans to sell 100% of the shares in TMD LLC, a loss-making asset in the American region, thereby increasing the company's overall profit level.

Maintain an “overweight” investment rating. With the continuous mass production of passenger car seat projects and the development of new projects, the gradual expansion of the division's new businesses, and the increase in the profitability of Grammer's overseas regions. Net profit due to mother for 24-26 is expected to be -0.45/0.78/1.11 billion yuan, respectively, maintaining the “increase in holdings” investment rating.

Risk warning: Industry development falls short of expectations, risk of technological iteration, R&D results falling short of expectations, risk of debt repayment, North American market recovery falling short of expectations, etc.