Summary of contents: From January to June 2011, the company realized operating income of 524 million yuan, an increase of 4.52% year-on-year; net profit attributable to owners of the parent company was 51.62 million yuan, an increase of 2.15% from the previous year, and EPS was 0.56 yuan. In the second quarter, the company achieved operating revenue of 270 million yuan, a year-on-year increase of 2.75%, an increase of 6.63% from the previous period; net profit attributable to owners of the parent company was 30.83 million yuan, an increase of 21.09% year-on-year, an increase of 22.95% from the previous quarter, and an EPS of 0.56 yuan.

During the reporting period, the net cash flow from operating activities of the company decreased by 83.15% year-on-year, which was mainly due to the decrease in cash received from sales of goods by 45.18 million yuan over the same period of last year, and the “gold content” of revenue decreased.

Gross profit margin continued to decline in the second quarter, and the cost rate declined during the period. In the first half of the year, due to the general increase in raw material prices, the company's comprehensive gross profit margin was 26.61%, a year-on-year decrease of 1.93 percentage points, and it also fell by 1.04 percentage points in the second quarter. With the continuous raising of interest rates in China and the impact of the debt crisis in Europe and America, inflation expectations in the second half of the year will gradually stabilize, and it is expected that prices of raw materials will be adjusted back in the second half of the year. In the first half of the year, the company’s fee rate was 16.81%, a year-on-year decrease of 0.18 percentage points and a decrease of 2.87 percentage points from the previous quarter.

The fundraising project progressed smoothly. The company currently has a number of fundraising projects under construction. Among them, annual output of 3 million exhaust manifold projects and 3 million automotive water pump projects have completed 98.89% of the investment progress, and it is expected to be put into production in September; the annual output of 3 million passenger car water pump rough line production projects and annual output The 3 million turbocharged exhaust manifold billet project will also be put into use in November this year and March next year, and will go smoothly. It is expected that the fund-raising project will be completed before the end of next year.

Exports doubled in growth, in line with expectations. In the first half of 2011, despite the decline in domestic auto demand, the company's domestic sales fell by 5.57% year-on-year, but the company's export business continued to grow at a rapid rate, an increase of 104.23% year-on-year, in line with our expectations. Furthermore, based on existing customers, the company is still further expanding its world-renowned auto companies including Fiat. It is expected that the company's export growth rate in the second half of the year is still expected to maintain its level in the first half of the year. The annual export volume is expected to double.

The company has made technological breakthroughs in electric water pumps and laid the foundation for the company's continued rapid growth. Compared with the traditional mechanical water pump, the electric water pump has the advantages of flexible control and low engine power consumption. At present, the domestic electric water pump mainly relies on imports, and recently the company has made technological breakthroughs in the area of ​​electric water pumps. Related products have entered the driving test stage. The research and development of electric water pumps have successfully broken the monopoly of foreign manufacturers. With the further increase of fuel consumption limit requirements in various countries, the market share of electric water pumps in the traditional automotive sector will gradually expand. In addition, electric water pumps are still parts of new energy vehicle cooling systems. The promotion of new energy vehicles will continue to enhance the electric water pump. Market demand. Therefore, we believe that the company's continued rapid growth in the future is worth the wait.

Earnings forecasts and ratings. We maintain the company's 2011-2013 EPS forecast of 1.09 yuan, 1.51 yuan, and 1.91 yuan. According to the current closing price of 24.91 yuan, the corresponding dynamic PE is 23 times, 16 times, and 13 times, respectively, considering that the company's export sales continue to be high Growth and electric pump development potential is greater, and maintain the company's "overweight" investment rating.