Engine cooling is leading the way to reduce emissions, and the new energy business opens up room for growth. The company has been deeply involved in engine cooling and emission reduction for 60 years, leading engine cooling and emission reduction. Based on the three traditional businesses of mechanical water pumps, exhaust manifolds, and turbocharger housings, the company is actively expanding new energy thermal management modules and new commercial thermal management businesses, while accelerating overseas deployment. In 2023/2024Q1, the company achieved revenue of 40.95/1.24 billion yuan, and net profit of 262/120 million yuan, an increase of 211.1%/75.0% year-on-year. Among them, new energy cooling components and modules reached 370 million yuan in 2023, an increase of 62.5% over the previous year. As the new energy and civil business accelerates, the company's performance is expected to continue to rise.
The basic plate is stable, and automotive thermal management products have blossomed a lot. The company's three major business advantages are stable: mechanical water pumps, exhaust manifolds, and turbocharger housings. 1) The mechanical water pump is the company's best product. In 2020, it was judged by the Ministry of Industry and Information Technology as the single champion product in the manufacturing industry. The company's automobile water pump market share is 25%, ranking at the top of the market. 2) Exhaust manifolds are in line with the global trend of energy saving and emission reduction. Currently, foreign investors occupy the main market. The company is one of the few large-scale domestic suppliers. The total production capacity of exhaust manifolds is 4.6 million units/year, benefiting from lower raw material prices. The company's exhaust manifold costs have been greatly saved, leading to increased performance. 3) Hybrid volume has driven a high growth in the company's turbo-shell business. The company laid out turbo-shell products earlier, and has now ushered in a harvest period. By 2023, sales reached 4.46 million units, an increase of 19% over the previous year, accounting for 45.9% of revenue.
The volume and price of electronic water pumps have risen sharply, and the company continues to expand thermal management modules and new business in the civil sector, and the process of going overseas has accelerated. 1) The company's electronic water pump business quickly launched with the release of new energy vehicles. The global NEV pump market is expected to reach US$4.09 billion in 2029. The company has strong R&D capabilities for electronic water pump products, a perfect layout system, continuous breakthroughs in fixed locations, and a fixed increase of 6 million units in 2022. The company expects to fully achieve a revenue increase of 1.2 billion yuan after delivery, while seizing market opportunities. 2) The volume and price of thermal management systems has risen sharply in new energy vehicles. The value of thermal management systems in new energy vehicles has increased 2-3 times to 7,000 yuan, and the market space of China's new energy thermal management industry is expected to increase to 93.8 billion yuan by 2025. The company established Shanghai Feilong New Energy Company in 2016 to develop thermal management module products, which are scheduled to expand production, and are full of orders. 3) As downstream demand increases in the field of civil thermal management, the company's high-power products have obvious advantages. The company's existing products can achieve technology migration, and the company is also actively expanding its products to fields such as server liquid cooling. As of August 2023, the company has more than 30 customers in the civilian sector, and more than 60 projects are underway, and some projects have already been mass-produced. 4) Continued expansion of overseas business. The total share of the company's overseas sales revenue in 2023 was 53.1%. In the future, with the commissioning of the company's factory in Thailand, the degree of internationalization of the company is expected to continue to increase.
Profit forecast and investment suggestions: We expect the company to achieve revenue of 53.24/65.19/7.688 billion yuan in 2024-2026, net profit to mother of 3.72/4.92/615 million yuan, EPS of 0.65/0.86/1.07 yuan/share, respectively. The current market value corresponding to 2024-2026 PE is 15/11/9 times. Leading automotive energy saving and emission reduction companies are accelerating business growth in the new energy module and civil sector. The performance is expected to reach an important inflection point, cover for the first time, and give it a “buy” rating.
Risk warning: rising raw material prices; macroeconomic fluctuations; sales of new energy vehicles falling short of expectations; rising production capacity falling short of expectations; increased industry competition; calculation errors.