Event: The company released the 2024H1 performance forecast. With 2024H1, the company expects to achieve net profit of 0.4-0.42 billion yuan, a year-on-year increase of 40%-47%; net profit after deducting non-return to mother of 0.35-0.37 billion yuan, an increase of 35%-43% year-on-year.

The performance exceeded expectations, and overseas profitability improved markedly. According to the performance forecast, we estimate that the company's net profit for the 2024Q2 single quarter is expected to be 0.21-0.23 billion yuan, up 31% -43% year on year and up 8%-19% month on month. On the revenue side, we expect to benefit mainly from the increase in domestic NEV sales and the release of overseas revenue. Q2 Domestic NEV retail sales of 2.35 million vehicles, +32% month-on-month. Meanwhile, Tesla's price adjustment strategy paid off, delivering 0.44 million vehicles in a single quarter, +14% month-on-month, better than market expectations. On the profit side, through increased utilization of overseas production capacity, the company's overall profitability has been further enhanced to offset the impact of rising freight rates and raw materials.

Develop emerging application fields for thermal management and create a future growth curve. Driven by national policies, the future market space for industries such as data centers, energy storage, and heat pumps is broad. In 2023, the National Development and Reform Commission and other departments proposed that by the end of 2025, various types of new computing power in national hub node regions will account for more than 60% of the country's new computing power. The company uses its advantages in automotive thermal management technology to empower fields such as energy storage, power transformation, overcharging, data centers, etc., to create comprehensive competitive advantages in product performance and cost. Among them, the data center server liquid cooling business has achieved zero customer breakthroughs, and the energy storage supercharged liquid cooling unit business continues to grow. At the same time, the company is actively expanding other application scenarios, such as computing power and artificial intelligence, to lay a solid foundation for medium- to long-term development.

Develop new business+global layout to open up future development space. In 2024, the company's revenue target is 13 billion yuan, aiming to reach 13.5 billion yuan, and the net profit margin to mother will reach more than 6%. The increase in performance comes from:

1) Global layout: In 2023, the company's newly acquired projects will add more than 6.1 billion yuan in annual revenue after delivery during the life cycle, with international orders of 2.6 billion yuan, accounting for 42%. With the increase in territorial production capacity, international customer orders have accelerated markedly; 2) Cost reduction and efficiency: The company has achieved comprehensive cost reduction through measures such as three packages of cost reduction, while comprehensively promoting excellent operation of global operators to further enhance profitability.

Profit forecast and valuation: The company's net profit for 2024-2026 is expected to be 0.88/1.14/1.4 billion yuan, respectively, and the corresponding PE is 16/12/10 times, respectively, maintaining a “buy” rating.

Risk warning: Downstream sales fall short of expectations, industry competition intensifies, and customer development falls short of expectations.