Incident Overview

1. Revenue in 2023 was 3.3 billion yuan, up 24% year on year, net profit after deducting 90 million yuan, up 113% year on year, Q1 revenue of 860 million yuan, up 27% year on year, and net profit after deducting 55 million yuan, up 66% year on year.

2. The inflection point of performance is clearly visible. The overall performance of the auto parts sector has increased, but in this context, Tamron's performance growth rate is still among the highest in the sector, highlighting the business results of the company's solid main business and lean management in the past two years.

3. The company's core thermal management components business grew steadily in '23, and agent-side integrated modules were designated by OEMs; carbon dioxide heat pump agent-side integration has already been shipped to the European public, and is expected to continue to grow in 2024.

4. The thermal management product line has been further enriched, and gas-liquid separators, electronic water pumps, etc. have been delivered in batches; the focus has been on building a NEV thermal management integrated module and core component project. After delivery, the project can produce 2.45 million sets (pieces) of NEV thermal management integrated modules and other core components per year, and the strength of the domestic automotive thermal management market will be further strengthened in the future.

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 an average annual growth rate of more than 30% over the next three years. Based on this, we adjusted 2024-2025 revenue to 45.3 billion yuan and 5.51 billion yuan (previously 4.52 billion yuan and 5.51 billion yuan), adding 2026 revenue to 6.78 billion yuan; 2024-2025 net profit of 280 million yuan and 330 million yuan (previously 250 and 330 million yuan), adding 2026 net profit of 430 million yuan; and 2024-2025 EPS of 0.57 and 0.66 yuan (previously 0.52 and 0.67 yuan), and added 2026 EPS 0.88 yuan; the closing price on April 26, 2024 was 7.87 yuan, corresponding to 2024-2026 PE was 13.82, 11.85, and 8.98 times, maintaining the “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.