Core Insights - The 10th Guangzhou International Auto Parts and Accessories Aftermarket Exhibition (AAG) opened on August 27, 2025, at the Poly World Trade Center in Guangzhou, showcasing the growth and influence of the automotive aftermarket in the Guangdong-Hong Kong-Macao Greater Bay Area and Southeast Asia [1][3]. Industry Overview - Since its inception in 2015, the AAG has developed into a significant professional exhibition for the automotive aftermarket, with a display area of 80,000 square meters, a 14% increase from the previous year, and participation from 1,781 brand enterprises, a 17% increase [3]. - The theme for this year's exhibition is "Intelligent Manufacturing, Driving Change, and Linking the Future," highlighting innovation in the automotive aftermarket [3]. Key Participants and Exhibits - The exhibition features over 1,200 auto parts companies, with more than 500 from the aftermarket sector and over 350 involved in the new energy sector [5]. - Notable exhibitors include leading brands such as Sumax, Anhui Dain, and Ningbo Tianwei, showcasing products ranging from suspension systems to brake components and electric vehicle solutions [6][9]. Thematic Areas and Activities - The exhibition includes three major thematic areas: auto consumables, commercial vehicles, and UTS modification salon, emphasizing the integration of automotive customization culture and aesthetics [12][14]. - A series of forums and discussions will be held, focusing on the future trends of the aftermarket service industry [14][24]. International Engagement - The event attracted 44 professional buyer groups from various regions, including Southeast Asia and the Middle East, indicating strong international interest [21][23]. - The overseas invitation efforts covered numerous countries, enhancing global participation [23]. Future Trends and Conferences - The exhibition aligns with Guangzhou's strategy to build a modern industrial system, focusing on intelligent connected new energy vehicles [26]. - Upcoming conferences will address critical topics such as the globalization of the automotive aftermarket and digital transformation [27]. Special Initiatives - AAG has planned various activities to celebrate its 10th anniversary, including art installations made from recycled auto parts and interactive experiences for attendees [28][32].

Core Insights - The company successfully held an investor communication event, showcasing its growth strategy and future plans, which signals positive development prospects [1] - The company is transitioning from a traditional automotive parts manufacturer to a major player in multi-scenario thermal management solutions, driven by a three-dimensional strategy focusing on automotive, non-automotive, and global expansion [1][4] Performance Growth - In the first half of 2025, the company's performance saw a year-on-year increase, supported by stable raw material prices, continuous optimization of product structure, and enhanced operational efficiency through value analysis and engineering [2] - The company anticipates clear revenue growth drivers for the second half of the year, including the ramp-up of overseas projects and sustained orders for new energy vehicle integration modules [2] Global Expansion - The company is accelerating its globalization strategy with Thailand as a key hub, establishing a "domestic + international" dual circulation system [3] - The completion of its first overseas smart factory in Thailand is expected to mitigate international trade risks and enhance its ability to respond to geopolitical fluctuations [3] Diversification into Non-Automotive Sectors - The company has successfully expanded into non-automotive sectors since 2017, achieving breakthroughs in high-tech fields such as liquid cooling [4] - The liquid cooling products, including electronic pumps and temperature control valves, cater to various applications, with over 80 clients and 120 projects currently in progress [4] Focus on Emerging Industries - The company is integrating thermal management technology with cutting-edge industries, particularly in robotics and low-altitude economy sectors, establishing partnerships with leading firms [5] - The establishment of a new subsidiary focused on non-automotive liquid cooling pumps is expected to enhance competitiveness in these emerging markets [4][5]

Core Viewpoint - The recent reduction of tariffs between China and the United States has alleviated pressure on foreign trade enterprises, leading to a turnaround in production and operations [1] Company Strategies - The company in Luoyang, Henan, has seen a backlog of over 20,000 products due to previous order cancellations from U.S. clients, prompting a shift in focus to other overseas markets and retail consumers [1] - The company plans to deepen its diversified market strategy, targeting emerging markets in Japan, Europe, and Central Asia, while also enhancing its "semi-managed model" to reduce logistics and compliance costs [1] - The company aims to promote brand strategy and improve risk resistance through market diversification, technological independence, and supply chain optimization [1] Market Diversification Efforts - The hair products company in Henan has experienced a significant impact on orders, with a total of $4 million affected due to U.S. retailers halting orders since March [2] - The company is actively exploring new markets in Europe, Africa, Asia, and South America to reduce reliance on the U.S. market while also focusing on domestic market growth [2] - The automotive parts company in Nanyang has successfully entered the European high-end market by leveraging its offices in Germany, France, and Sweden, thus increasing revenue from regions outside the U.S. [2] Trade Data and Growth - In the first four months of 2025, Henan Province's foreign trade reached 275.77 billion yuan, a year-on-year increase of 29.5%, with exports growing by 44.1% and imports by 6.5% [3] - Trade with ASEAN and EU has seen rapid growth, with imports and exports to ASEAN increasing by 11% and to the EU by 19.2% [3] - The province is also enhancing support for foreign trade enterprises through initiatives like "Foreign Trade Quality Products China Tour" and "Double Product Online Shopping Festival," resulting in a 42% domestic sales conversion rate [3] Financial Support Initiatives - Henan Province has implemented ten financial measures to provide comprehensive services to foreign trade enterprises, ensuring each company has at least one bank for tracking services [4] - Customized financial service plans are being developed based on the operational characteristics of each foreign trade enterprise [4] - The province aims to expand the coverage of export credit insurance to over 45% and explore "cross-border e-commerce insurance" through a co-insurance model [4]

Investment Rating - The investment rating for the company is "Buy" (maintained) [7] Core Views - The company is a leader in automotive water pumps, with IDC liquid cooling and humanoid robot businesses expected to drive a second growth curve, leveraging technology reuse and customer collaboration to potentially exceed performance expectations [1] Financial Projections - Revenue projections for 2025-2027 are estimated at 56 billion, 68 billion, and 80 billion RMB, with year-on-year growth rates of 19%, 21%, and 18% respectively, resulting in a CAGR of 19% [5] - Net profit attributable to the parent company is projected to be 4.4 billion, 5.4 billion, and 6.5 billion RMB for the same period, with growth rates of 34%, 21%, and 22%, leading to a CAGR of 25% [5] - The corresponding P/E ratios are expected to be 19X, 16X, and 13X [5] Market Position and Comparisons - The average P/E ratio for comparable companies such as Yinlun, Shuguang, and Shenling is 35X for 2026E, while the company's current P/E is only 16X, indicating significant upside potential [3] - The company has a 25% market share in the domestic automotive water pump market and a 20% share in the turbocharger casing market, establishing it as a leader in these segments [10] Growth Catalysts - Future catalysts include orders for liquid cooling pumps, robot orders, and quarterly earnings growth [4] - The liquid cooling server market is expected to grow at a CAGR of 46.8% from 2024 to 2029, with the company positioned to capture a share of this emerging market [10] - The company has entered the humanoid robot sector, with potential for growth similar to that of a comparable company, Sanhua Intelligent Control [10]