Event: The company publishes its report for the first quarter of 2024. In Q1 2024, the company achieved operating income of 1,738 billion yuan, a year-on-year increase of 20.25%; realized net profit of 145 million yuan, +57.39% year-on-year; realized net profit of 119 million yuan without return to mother, +76.05% year-on-year.

Operating efficiency continues to improve, and interest income increases profits. The company has continued to improve its internal digital governance capabilities in recent years, its management capabilities have continued to be enhanced, and its fee control results have been remarkable. 2024Q1, the company's sales/management/R&D/finance expense ratios were 9.50%/5.58%/11.83%/-1.70%, respectively, a year-on-year decrease of 0.74/1.44/1.04/2.00pct, respectively. Among them, the sharp decline in the financial expense ratio was mainly due to the company's interest income of 35.1427 million yuan in Q1, a significant increase over the previous year.

Fully increase the “AI+ industry” and deepen the investment layout in the field of robotics. The company will soon launch the first big AI model for process industry operation optimization and design, which is expected to achieve a revolutionary breakthrough in the efficiency of the process industry. In February 2024, the company and Jiazhi Technology formally signed a strategic cooperation agreement to jointly promote the construction of an overall solution service platform for the process industry at home and abroad. Jiazhi Technology is one of the world's leading companies in the field of intelligent mobile robots. It has a diverse product portfolio and solutions such as AMR mobile robots, intelligent unmanned forklifts, and outdoor heavy-duty unmanned work robots. In March 2024, the Zhejiang Humanoid Robot Innovation Center, in which the company participated, released the first self-developed humanoid robot “Pioneer 1”. The company will continue to deepen cooperation with the Innovation Center, and has signed strategic cooperation framework agreements with 9 organizations including China Electronics Technology Group Co., Ltd. to work together to build a perfect humanoid robot industry ecosystem. We believe that the company has a deep accumulation of data, algorithms and scenarios in the process industry, and the robot products it has launched can be expected in the future.

Investment advice: The company is expected to achieve operating income of 109.47/137.35/16.917 billion yuan in 2024-2026, an increase of 27.00%/25.47%/23.17% year on year; net profit to mother of 12.44/14.22/ 1,710 billion yuan, up 12.92%/14.33%/20.18% year on year.

Maintaining a “buy rating”

Risk warning: Downstream capital expenditure falls short of expectations, overseas market expansion falls short of expectations, AI+ industry implementation falls short of expectations, risk of macroeconomic fluctuations.