Investment Rating - The report initiates coverage with an "Outperform" rating for the company [3][5]. Core Views - The company is recognized as a global leader in cylinder sleeves, with a strong emphasis on research and development, and a diversified product matrix that opens up new growth opportunities [1][2][12]. - Revenue has shown stable growth, with a compound annual growth rate (CAGR) of 11.8% from 2014 to 2024, and a projected revenue of 33.1 billion yuan in 2024 [1][33]. - The company is strategically expanding into new business areas such as emergency power generator sets, brake systems, and electric control actuators, which are expected to enhance its core business [2][19]. Financial Performance - The company achieved a revenue of 19.43 billion yuan in the first half of 2025, representing a year-on-year increase of 14.6%, with a net profit of 2.34 billion yuan, up 32% year-on-year [1][12][33]. - The financial forecast indicates revenues of 33.1 billion yuan in 2024 and 39.84 billion yuan in 2025, with net profits expected to reach 4.08 billion yuan in 2025 [4][33]. Business Segments - The revenue structure as of the first half of 2025 shows that internal combustion engine components account for 66.1%, automotive electronics 7.9%, brake systems 14.7%, and other businesses 11.3% [1][12]. - The company is focusing on expanding its internal combustion engine business, which includes cylinder sleeves, pistons, and other key components, while also exploring opportunities in hydrogen fuel cells and related technologies [2][19][25]. Research and Development - The company places a high priority on R&D, with an investment of 83.85 million yuan in the first half of 2025, representing 4.3% of its revenue [37]. - A new industrial development research institute was established in Shanghai to focus on forward-looking technologies and emerging industries [37]. Production Capacity - The company has implemented lean manufacturing and automated production lines, with a total production capacity of 75 million cylinder sleeves annually and plans for further expansion in Thailand [41][42]. - The strategic layout includes multiple production bases across China and an ongoing investment in overseas production to mitigate geopolitical risks [42].

Core Viewpoint - The company is a leading global supplier of cylinder liners with deep technical accumulation, evolving from a state-owned factory established in 1958 to a major player in the industry. Its revenue structure as of H1 2025 includes 66.1% from internal combustion engine components, 7.9% from automotive electronics, 14.7% from braking systems, and 11.3% from other businesses [1][11][12]. Revenue Growth and Financial Performance - The company has maintained stable revenue growth over the years, with revenue increasing from 1.08 billion yuan in 2014 to 3.31 billion yuan in 2024, representing a compound annual growth rate (CAGR) of 11.8%. In H1 2025, revenue reached 1.943 billion yuan, up 14.6% year-on-year, with a net profit of 234 million yuan, reflecting a 32% increase [2][3][30]. Business Segments and Product Matrix - The company has diversified its product offerings into four main segments: 1) core components for internal combustion engines (cylinder liners, pistons, piston rings, and bearings), 2) automotive electronics, 3) braking system components, and 4) hydrogen and fuel cell system components. The internal combustion engine business serves as a stable revenue base while actively expanding into growth areas [19][20][22]. Internal Combustion Engine Business - The company has a strong presence in the internal combustion engine sector, producing key components such as cylinder liners and pistons. It is positioned at the forefront of engineering equipment research and new materials, with significant clients including Caterpillar, MTU, and Cummins. The company aims to capture market share in the large-diameter diesel generator set market, enhancing its profitability [4][5][51]. Braking Systems and New Business Opportunities - The company’s dual-metal composite brake drum products have seen a revenue increase of 56.3% year-on-year in H1 2025. The electric control actuator business is also expanding, with new product and customer development expected to drive growth. The company is exploring opportunities in hydrogen fuel cell systems and related components, leveraging its technical capabilities and customer resources [6][7][19]. Research and Development Focus - The company places a high emphasis on research and development, with R&D expenditures amounting to 83.85 million yuan in H1 2025, representing 4.3% of revenue. It has established a national-level enterprise technology center and is actively involved in developing advanced technologies in the industry [38][39]. Production Capacity and Efficiency - The company employs a lean manufacturing model and has made significant investments in automation to enhance production efficiency. As of the end of 2024, it operates 32 casting lines for cylinder liners and has plans to expand production capacity in Thailand to mitigate geopolitical risks [43][45][46]. Customer Base and Market Expansion - The company has established solid strategic partnerships with leading domestic and international clients, including major players in the internal combustion engine sector. Its products are exported to over 60 countries, serving clients such as Ford, General Motors, and Mercedes-Benz [28][36].

Product Portfolio - The company has developed a product structure consisting of four major segments: internal combustion engine components, automotive electronics, braking systems, and hydrogen energy [2][3] - The internal combustion engine segment includes cylinder liners, pistons, piston rings, and bearings, with cylinder liners recognized as a manufacturing champion and holding a leading global market share [2] - The automotive electronics segment focuses on turbocharger electronic actuators, which have seen a year-on-year increase in market share [2] - The braking system segment features composite brake drums, which are positioned at the forefront of the industry due to technological advantages and product performance [2] - The hydrogen energy segment includes a comprehensive range of products such as hydrogen fuel cell engines and bipolar plates [2] Overseas Expansion - The company plans to invest no more than RMB 350 million to establish a factory in Thailand, aiming to enhance its global market presence [3] - The Thai factory will feature four casting production lines and 18 cylinder liner processing lines, with an annual design capacity of 7 million cylinder liners [3] - The first casting production line has been completed, and the initial batch of qualified products has been successfully produced [3] Product Advantages and Capacity Expansion - The company's dual-metal composite brake drum offers advantages such as lightweight design, improved durability, and better thermal performance compared to traditional brake drums [4] - The second phase of the brake drum project was completed and put into production in June 2025, with an overall planned annual capacity of 1.4 million units [4] - The company will adjust production lines based on market demand to meet both domestic and international customer needs [4] Electric Actuator Development - The electric actuator product line includes various models for gasoline and diesel engines, with advantages in size, weight, integration, and cost [5][6] - The company has secured a significant order from an international client for its diesel engine smart electric actuators, breaking the monopoly of foreign brands in the high-end commercial vehicle market [6] - Continuous investment in production line expansion is planned to meet the growing demand for electric actuators [6] Research and Development Initiatives - In 2024, the company established an industrial development research institute in Shanghai, focusing on internal combustion engine research, new energy development, and automotive electronics [7] - The research institute aims to enhance innovation and support the company's technological advancements and industrial upgrades [7]

Core Viewpoint - The strategic cooperation between Zhongyuan Nepe and Sunshine New Energy aims to enhance green energy consumption, reduce energy costs, and improve product competitiveness while contributing to the "dual carbon" goals [1][2][3] Group 1: Strategic Cooperation Details - Zhongyuan Nepe signed a strategic cooperation agreement with Sunshine New Energy to build a 100MW wind power project in Mengzhou, with an initial phase of 50MW [2] - The cooperation focuses on hydrogen energy equipment manufacturing, leveraging both companies' strengths to develop a comprehensive hydrogen energy manufacturing system [2][3] - The partnership includes collaboration on hydrogen infrastructure, such as hydrogen production and refueling stations, and aims to replace traditional energy sources with green alternatives [2] Group 2: Benefits and Goals - The cooperation is expected to accelerate Zhongyuan Nepe's energy structure transformation and promote green development, enhancing the company's core competitiveness [3] - By utilizing renewable energy and reducing costs, the partnership aims to achieve mutual benefits and drive the transition to green energy [2][3] - The collaboration will also facilitate the promotion of hydrogen fuel cell systems and expand the hydrogen energy industry chain [3]

Investment Rating - The report maintains a "Recommended" rating for Zhongyuan Neipei (002448.SZ) [6] Core Views - The company achieved a revenue of 3.31 billion yuan in 2024, a year-on-year increase of 15.6%, while the net profit attributable to shareholders was 204 million yuan, a decrease of 34.4% [1] - In Q1 2025, the company reported a revenue of 950 million yuan, up 13.8% year-on-year, and a net profit of 111 million yuan, an increase of 25.9% [1] - The gross margin for 2024 and Q1 2025 was 25.7% and 27.8%, respectively, with fluctuations mainly due to changes in the business structure [2] Summary by Sections Financial Performance - The company’s gross margin fluctuated due to changes in domestic and overseas business proportions, with overseas revenue declining by 8% in 2024 due to economic downturns, while domestic revenue increased by 49% [2] - The expense ratio for 2024 and Q1 2025 was 14.5% and 12.6%, respectively, showing a continuous decline over five years, indicating improved cost control [2] Profit Impact - The profit was significantly impacted by a goodwill impairment of 120 million yuan related to the acquisition of Incodel Holding LLC in the U.S., leading to a net profit margin of 6.2% for 2024, down 4.7 percentage points year-on-year [3] - Excluding the goodwill impairment, the net profit for 2024 would have shown an approximate growth of 10% year-on-year [3] Business Development - The company maintains stable partnerships with major clients in the cylinder sleeve and piston product sectors, with sales growth of 17% and 23% for these products in 2024 [4] - New business ventures, such as the brake system and hydrogen energy projects, are progressing, with the brake system generating revenue of 473 million yuan and a net profit of 33.73 million yuan in its first full year [4] - The company is accelerating the construction of a production base in Thailand for cylinder sleeves, aiming for an annual output of 7 million units [3] Future Outlook - The company is expected to achieve revenues of 3.76 billion, 4.24 billion, and 4.78 billion yuan in 2025, 2026, and 2027, respectively, with year-on-year growth rates of 13.6%, 12.9%, and 12.7% [5] - Projected net profits for the same years are 377 million, 433 million, and 490 million yuan, with significant growth anticipated in 2025 [5]