Changzhou Tenglong Auto Parts Co.Ltd(603158) (603158)
Extensive M & A enriches the auto parts business and lays the foundation for system integration. The company started from the automotive air-conditioning pipeline business and enriched the automotive parts products through extensive M & A, In September 2017, it acquired 54% equity of litchi Leo (the main product is EGR cooler). At the end of 2017, litchi Leo held TIANRUIDA (the main product is EGR valve) to open up the EGR industry chain; in October 2019, the company controlled Beijing Tianyuan and laid out engine turbocharging hose. At present, the company’s two main businesses are thermal management system parts and engine energy-saving and environmental protection parts, and the products are applied to traditional vehicles, hybrid vehicles and pure electric vehicles. In addition, the company invests in Xinyuan power and currently holds 29.64% (21 year semi annual report), layout hydrogen fuel cell business.
The thermal management system of new energy vehicles is highly complex, and the volume and price of single vehicle parts rise at the same time. 1) Air conditioning system: in terms of refrigeration, new energy vehicles are similar to traditional vehicles. In terms of heating, traditional vehicles use engine waste heat, and new energy vehicles need to be equipped with PTC / heat pump heating. 2) Heat dissipation: only the engine of traditional vehicles needs heat dissipation, while batteries, motors and electronic controls of new energy vehicles need heat dissipation. The number of pipes in the thermal management system of new energy vehicles has increased, the technical requirements for pipe end forming, sealing groove spinning, pipe bending, sealing welding between pipes and other processes have increased, the product price has increased, and the value of single vehicle is 3-4 times that of traditional vehicles. In 2020, the company’s auto thermal management parts business revenue was 836 million yuan, accounting for 47%, which is the largest source of revenue. With the increasing penetration of new energy vehicles, the expansion of production bases in Europe and the development and cooperation of carbon dioxide heat pump technology, the company’s thermal management parts business is expected to grow at a high speed.
With the upgrading of automobile exhaust emission standards, the EGR installation rate is expected to increase. EGR system is an engine exhaust gas purification device, which allocates part of the exhaust gas to re-enter the cylinder and participate in combustion with fresh mixture to reduce the combustion temperature. For diesel engine, it can directly reduce the nitrogen oxide concentration in the engine, and for gasoline engine, it can improve fuel efficiency and reduce fuel consumption. Since 2000, China has formulated a series of environmental protection regulations for motor vehicles, continuously improving emission standards and upgrading the technical route of tail gas treatment. Since July 21, the national six standards have been fully implemented for heavy vehicles. Some diesel engines adopt doc + SCR route in national five and EGR + doc + DPF + SCR route in national six. The upgrading of laws and regulations brings increased demand. In 2020, the company’s EGR business realized a revenue of 189 million yuan, covering customers such as han’ang, MAHLE, Yunnei, Xiaokang, Weichai and quanchai. The business volume is equivalent to that of Longsheng (EGR product revenue of 223 million yuan in 2020). It has a certain market share and is expected to enjoy the high-speed growth of demand dividend brought by the policy.
Layout the hydrogen fuel cell business and become the largest shareholder of Xinyuan power. Founded in 2001, Xinyuan power is the contractor of the “National Engineering Research Center for fuel cell and hydrogen source technology”. Since its establishment, it has undertaken the major special project of the “863” plan of the Ministry of science and technology – the research and development of vehicle fuel cell engine. Its innovative achievements cover all levels of key materials, key components and whole reactor system of proton exchange membrane fuel cell engine system, It has nearly 400 patented technologies with independent intellectual property rights. Hymod, the second generation product produced by Xinyuan power ®- 36 successfully applied SAIC Roewe 750 and SAIC Maxus fcv80, becoming the first fuel cell independently developed in China with durability exceeding 5000 hours, which can realize low-temperature startup at – 10 ℃ and storage at – 40 ℃; The third generation product hystk ®- It has become the first highly integrated high-power stack with independent intellectual property rights in China. With high power density and long range, hydrogen fuel cell is a new energy solution for heavy commercial vehicles in the future. At present, there is strong policy support. The first batch of fuel cell vehicle demonstration and application cities have been launched, of which Beijing plans to promote 10000 vehicles by 2025. The company actively arranges hydrogen fuel cell and core parts business, and makes full use of customer resources and manufacturing capacity, which is conducive to long-term development.
Profit forecast and investment rating: we expect the company to achieve revenue of RMB 2.140 billion, RMB 2.706 billion and RMB 3.318 billion in the 21st-23rd year, with a year-on-year increase of + 20.8%, + 26.5% and + 22.6%; The net profit attributable to the parent company was 158 million yuan, 237 million yuan and 295 million yuan, with a year-on-year increase of + 1.7%, + 49.4% and + 24.7%. The current share price corresponds to 22 years pe24 7x, lower than the industry average. It is optimistic that new energy vehicles will drive the simultaneous rise of the volume and price of thermal management parts, the upgrading of environmental protection regulations will drive the growth of the demand for EGR system, the long-term planning for the layout of high-quality hydrogen fuel cell assets, and the ability to expand development through investment, M & A, and give a “buy” rating.
Risk factors: the penetration rate of new energy vehicles is lower than expected, the EGR installation rate is lower than expected, the capacity construction is lower than expected, and the development of hydrogen fuel cell is lower than expected
