[Tianfeng Auto] Zhongyuan Internal Friction (4) Update After Exchange: Long Slope with Thick Snow, Not Just AI, Target 30-Year Revenue of 10 Billion - 0727

English summary

Excellent companies can amplify their own advantages and seize opportunities of the times. Zhongyuan is one. Zhongyuan has been competing in cylinder liner products for decades and become a leader, with 50% domestic share and 20%+ overseas share. # It is basically the sole supplier for Caterpillar, Cummins, diesel generators, and gas generators. It is expanding from cylinder liners to pistons, piston rings, and bearing shells to form a module supply capability. Diesel generator pistons are expected to ramp up in 2027, both domestically and overseas. Overall AIDC supporting business is expected to generate 100 million profit in 2026 and 200-300 million in 2027. The market worries that Zhongyuan's main business negative beta prevents valuation. We believe that # valuation depends on growth potential: First, the market is expanding, exports were only to the US in the past, and will expand to Europe in 2026. Second, products are expanding, pistons have removed restrictions and started ramping up; brake drums are unrelated to new energy, with revenue of 1 billion in 2026, targeting doubling by 2028; electronic controllers have won new large European orders, cutting into Bohua's 2-3 billion scale. Revenue growth is far more than 20%, and the fuel/commercial vehicle segment has less competition and technology leadership, leading to better-than-industry gross margins (~25%).…