Local air conditioning pipeline leader expanded layout fuel cell: Tenglong Co., Ltd. is a steam zero manufacturer specializing in automotive thermal management system parts and engine energy saving and environmental protection parts. it is not only a local automotive air conditioning pipeline leader, but also a local head diesel EGR supplier. The company will accelerate the layout of hydrogen fuel cells by increasing its holdings of new sources in 2020.
Thermal management business: plus overseas, benefit trams. This business is the basis of the company's revenue and profit. The share of income and gross profit in 2019 was 65% and 63%, respectively. Thanks to the popularity of heat pump air conditioners and the rise of carbon dioxide refrigerants, the thermal management system of new energy vehicles is more complex, and the value of a car is at least double that of traditional cars. The increase in the penetration of new energy vehicles is expected to provide support for the company's continued revenue growth. Compared with local competitors, the company has significant advantages in cost control and R & D investment, and is accelerating its expansion into the European market, and its share may continue to increase.
EGR business: improve the product line and enjoy the dividend of emission upgrade. In 2017, the company acquired 54% of Leo shares and realized the full layout of EGR parts, coolers and valves through Liqi Leo holding Yibin Tianruida. In 2018, Tianruida ranked fourth in the domestic diesel engine EGR market share. With the full implementation of the national six emission standards for diesel commercial vehicles in July 2021, the EGR permeability of diesel engines is expected to increase to 80% in 2022, while the use of high temperature sensors in the rear row will increase by 1 or 2, and the company is expected to benefit.
Fuel cell business: increase the holdings of new sources, layout the future. We believe that fuel cells and lithium batteries complement each other.
With the continuous support of national policies, the fuel cell industry is about to enter a stage of rapid growth, and the annual production and sales scale is expected to grow at a compound growth rate of more than 70% from 2020 to 2030. We estimate that the annual sales of fuel cell vehicles in China are expected to reach 50, 000 in 2025 and 340000 in 2030. With reference to the lithium battery industry, high-tech barriers may make the stack and its components the best competitive track in the industrial chain. In 2020, the company increased its holdings of established fuel cell enterprises, Xinyuan Power, and became its largest shareholder. Xinyuan Power Technology accumulates profoundly, and the performance parameters of the fourth generation stack are in the forefront of the industry. it has cooperated with SAIC, FAW, Dongfeng, Guangzhou Automobile and Changan, and its products cover passenger cars, buses and heavy trucks.
Profit forecast, valuation and rating: in the short term, automotive hose and thickened 2021 performance, diesel engine emission regulations upgrade is expected to promote the growth of EGR business. In the medium and long term, it is optimistic that the company's air-conditioning pipeline products will open up the European market, benefit from the increase in the value of air-conditioning pipes of new energy vehicles, and the rapid growth of fuel cell business with the improvement of the prosperity of the industry. It is estimated that the company's income from 2020 to 2022 is 1.69 billion yuan, 2.1 billion yuan and 2.4 billion yuan respectively, and the net profit returned to the mother is 160 million yuan, 210 million yuan and 250 million yuan (corresponding to EPS 0.73.0.96 and 1.16 yuan). According to the segment valuation method, the reasonable valuation of the company is 5.1 billion yuan, corresponding to the value of 23.65 yuan per share, and the "overweight" rating is given for the first time.
Risk tips: the recovery of global cars and new energy vehicles is not as expected; the company's overseas market expansion is not as expected; the risk of increased competition in the industry; the development of the fuel cell vehicle industry is not as expected.