The company released its report for the first quarter of 2024, achieving operating income of 902 million yuan, +13.66% year over month, and realized net profit to mother of 214 million yuan, +21.52% year over year, and -31.84% month on month.

Gross margin increased sharply year over year, with AMI projects accounting for about 60%. In the first quarter of 2024, the company achieved a gross profit margin of 44.25%, a year-on-year +5.64pct, and a net sales margin of 23.69%, and +1.52 pcts year-on-year. We believe that the main reason for the sharp increase in gross margin is the sharp increase in revenue from AMI in the electricity business. According to the company's annual report, the company's AMI project accounted for about 60% of the company's total revenue in the overseas smart electricity business in 2023, and the increase in the share of AMI projects led to an increase in gross margin.

Electricity meter exports are divided regionally, and the company's export core regions are growing at a high rate. According to customs data, electricity meter exports in March 2024 were 714 million yuan, +6.2% month-on-month, and +5.94% year-on-month. By region, European exports in March were 278 million yuan, +52.28%, year-on-month, -30.22%, cumulative exports in January-March were 744 million yuan, -25.6% year-on-month; Africa's exports in March were 178 million yuan, -7.15% month-on-month, +10.96%, January-March cumulative exports of 562 million yuan, year-on-month +65.12%, Asia Exports amounted to 164 million yuan, -18.23% YoY, -6.64% YoY. Cumulative exports in January-March amounted to 690 million yuan, +17.69% YoY.

Looking at the revenue structure of Haixing Electric Power in 2023, China was 1,408 billion yuan, -4%; Africa was 1,003 billion yuan, +157%; Southeast Asia was 872 million yuan, +32%; Latin America was 799 million yuan, +4% year over year; and Europe was 118 million yuan, +428% year over year. From an overall perspective, electricity meter exports declined slightly, but mainly due to Europe's month-on-month decline in March, but demand in Africa was +65.12% year-on-year, and demand continued to be strong. The Asian region, the third-largest export market, had a cumulative year-on-year ratio of +17.69%. The growth rate in the company's core export region continued to maintain a high growth rate, and the company's subsequent performance is expected to maintain a high growth rate.

Investment advice: We expect the company's net profit from 24-26 to be 1,08/14.94/1,788 billion yuan, +22.9%/23.7%/19.7% year-on-year, corresponding EPS of 2.47/3.06/3.66 yuan, respectively, to maintain a “buy” rating.

Risk warning: Overseas meter investment falls short of expectations, and the development of the new energy business falls short of expectations