Incident: After the market on April 26, the company released its 2024 quarterly report.

The performance greatly exceeded expectations; 2024Q1 revenue increased 37% year on year, and net profit to mother increased 286% year on year, 2024Q1 achieved operating income of 240 million yuan, up 37.24% year on year; net profit to mother was 58.38 million yuan, up 285.87% year on year; net profit after deducting non-return to mother was 51.99 million yuan, up 349.93% year on year. The sharp year-on-year increase on the profit side was mainly due to effective control of the cost ratio during the period, which contributed to the increase in net interest rates.

Expense ratio was effectively controlled, and profitability increased significantly; 2024Q1 net sales margin increased 15.64 pct year on year profitability: 2024Q1 sales gross margin was 46.56%, down 1.95 pct year on year, up 0.35 pct month on month. The year-on-year decline in gross margin may be due to changes in domestic and foreign revenue structure; net sales margin was 24.27%, up 15.64 pct year on year, up 2.48 pct year on month. The increase in profitability was mainly due to a significant decrease in the cost rate during the period.

Cost side: The cost rate during 2024Q1 was 22.45%, down 18.59 pcts year on year and 1.22 pct month on month.

The sharp year-on-year decline in the cost ratio during the period was mainly due to the sharp decline in sales and R&D expenses. Among them, sales, management, R&D, and financial expense ratios decreased by 8.75, 1.55, 6.19, and 2.1 pct, respectively.

Leading wind power safety equipment leader, strong domestic wind power+overseas and multi-field expansion opens up room for growth 1) Overseas market expansion: ① Stock market: The North American and European markets all have large inventory transformation needs, and the company can enjoy the blue ocean market of overseas stock transformation; ② New markets: The company has more room for improvement compared to the domestic market. The transformation of overseas stock markets and an increase in market share in new markets are expected to bring room for incremental performance.

2) Expansion in multiple fields: The company's products are moving towards platform-based enterprises in multiple fields, such as industry and construction, emergency rescue, power grids, etc. At present, many new products have been launched in emerging fields. Among them, material conveyors and tower climbers are expected to become the company's next best products. ① Material conveyors: The application field is overseas household photovoltaic construction. Overseas labor costs are high. Equipment can help construction teams reduce labor costs and is expected to become standard for construction teams; ② Tower cranes:

Tower cranes are the main application scenario. Currently, there are tower cranes in stock that have not yet been equipped with lifting equipment. As labor dividends decrease and emphasis on life safety increases, tower cranes are expected to be equipped with additional lifting equipment. The expansion of application fields will be an increase in the company's medium- to long-term development.

3) Increased demand in the domestic wind power market: ① Demand for new installed wind power: In 2023, the domestic public tender market added 86.27 GW of tenders, a year-on-year decrease of 12.5%, maintaining a high level. According to CWEA forecasts, in 2024, the new lifting capacity of domestic wind power was about 75GW-85GW, a rapid increase over the previous year; ② Product/solution optimization and iteration brought about an increase in the value of single fan product configuration. 1. Product iteration: The company launched a high-load lift and rack and pinion lift, which is significantly higher in price compared to ordinary lifts; 2. Solution optimization: The company launched a “dual tower climbing” solution, that is, a lift+no crawler/climber, which increases the value of single fan configuration products; ③ Aftermarket demand: The wind power operation and maintenance market space is broad, which is expected to provide growth points for the company's medium- to long-term performance.

Profit forecast and valuation: Optimistic about the company's major development in the field of wind power and emerging applications, the 2024-2026 net profit is estimated to be 2.92, 374, and 478 million, up 41%, 28% year-on-year, and CAGR = 28%. The corresponding PE is 21, 16, and 13 times, maintaining the “buy” rating.

Risk warning: 1) New domestic wind power installations fall short of expectations; 2) Expansion in overseas and other fields falls short of expectations.