Incident: The company recently released its 2024 three-quarter report. The first three quarters of 2024 achieved revenue/net profit of 2.703 billion yuan/0.236 billion yuan/0.172 billion yuan, respectively, +14.22%/+68.41%/+31.34% year over year; 3Q24 revenue/net profit attributable to mother/net profit without return to mother 0.967 billion yuan/0.122 billion yuan/0.064 billion yuan, respectively + 10.67%/+92.32%/+7.45%.

Revenue grew steadily, and the new energy business increased significantly

The company's revenue for the first three quarters of 2024 was 2.703 billion yuan, up 14.22% year over year. The company continues to expand its product share in the NEV market. In the first half of 2024, the company's NEV thermal management products achieved revenue of 0.604 billion yuan, accounting for 59.36% of the revenue of thermal management system components.

Gross margin improved month-on-month, and profitability increased dramatically

1) Gross profit margin: gross margin for the first three quarters of 2024 was 21.83%, +0.15pct; 3Q24 gross margin was 22.17%, -0.29pct and +2.31pct, respectively; 2) Expense ratio: 1.25% for the first three quarters of 2024, -1.07pct, R&D expense ratio +0.12pct; 3) Net profit margin: Net profit margin for the first three quarters of 2024 was 9.87%, +2.76pct yoy; net profit margin for the first three quarters of 2024 was 6.37%, yoy + 0.83 pct.

Accelerate overseas market expansion, and overseas orders have increased dramatically

1) Leveraging the role of the Polish factory as a bridgehead in Europe, there was a marked increase in orders for the simultaneous development of new overseas models and products; 2) Malaysia's new investment plan to form air conditioning pipeline production capacity covering Southeast Asia while supporting upstream aluminum tube product plans; 3) According to subsequent layout plans in Europe and mass production plans for new OEMs such as Stellantis, the Moroccan factory preparation work was carried out to further improve and optimize the overseas market layout.

Lay out the rubber mixing center and air conditioning hose production line, and promote the pipeline assembly module

The company plans to build a 6,000 tons/year mixed rubber production capacity and a 10 million meter/year air conditioning hose project. After completion, it will expand from the field of engine hoses to the field of air conditioning hoses, and become an automotive air conditioning pipeline module system manufacturing base integrating formula development, process development, integrated pipeline assembly module design, high-end product production and technical services. The project has completed overall plant construction and equipment commissioning, and trial production of the first batch of samples.

Investment advice

Tamron Co., Ltd. is the leading domestic thermal management air conditioning pipeline, with new business development and growth; maintaining the revenue forecast, the 2024-2026 revenue is expected to be 4.53, 5.51, 6.78 billion yuan; the net profit for 2024 will be increased, and the net profit to mother for 2024-2026 will be 0.3, 0.33, 0.43 billion yuan (the original forecast was 0.28, 0.33, 0.43 billion yuan); EPS for 2024-2026 is 0.61, 0.68, 0.88 billion yuan; The closing price on October 30, 2024 was 8.14 yuan, corresponding to 2024-2026 PE of 13.26, 12.03, 9.26 times, maintaining the “gain” rating.

Risk warning

The risk of fluctuating raw material prices, increased market competition, and the impact of car market price wars.