Raise the target price to 34.72 yuan to maintain the overweight rating. Due to the influence of core shortage and price increase in the short term, the annual EPS forecast of the company in 2021-22-23 is 0.83 (- 0.04) / 1.24 (+ 0.02) /

1.68

The newly signed order is hot and optimistic about the long-term development of the company, raising the target price to 34.72 yuan (original 28.95 yuan), corresponding to 28 times PE in 2022.

Capacity release + new product expansion, performance greatly increased compared with the same period last year. Benefiting from the release of IPO capacity and the good progress of the company's new energy products, in the first three quarters of 2021, the company achieved 1.189 billion yuan in revenue, + 31% year-on-year, and 111 million yuan in net profit, + 76.6% in the same period last year. Among them, the company's core automatic transmission valve plate year-on-year + 70%, new energy year-on-year + 50%.

The price of raw materials has risen, putting pressure on profits in a single quarter. Q3 single quarter, affected by the epidemic, core shortage and power production restrictions, the company's revenue was 383 million yuan (month-on-month increase) and net profit was 32 million yuan (month-on-month ratio + 4%). Due to the significant increase in the proportion of core products, the gross profit margin increased more than the same period last year. Q3 aluminum price is still high, the company's raw materials are mainly aluminum, superimposed industry lack of core, epidemic and power constraints and other effects, month-on-month, profitability is still under some pressure.

Important orders have been won continuously, and capacity expansion has contributed to long-term growth. Since 2021, the company has successively won heavy orders for BYD hybrids, beehives, US-funded electric cars and so on, with an announcement amount of about 2 billion yuan. In order to break the capacity bottleneck and ensure the delivery of orders, the company has planned production bases in Maanshan, Tianjin and Hungary. During the accelerated construction of the project, the company will increase its output value by at least 2 billion in the future.

Risk tips. Capacity expansion may fall short of expectations; the risk of sustained price increases in raw materials; and the growth rate of the industry may be lower than expected.