Event: The company released the 2024 semi-annual results forecast.

The performance was in line with expectations. The company's estimated net profit for the first half of the year was 0.4-0.42 billion yuan, up 40.1%-47.1% year on year; net profit without return to mother is expected to be 0.35-0.37 billion yuan, up 35.4% -43.1% year on year; the second quarter is expected to be 0.208-0.228 billion yuan, up 31.5%-44.1% year on year, up 8.9%-19.3% month on month; net profit without return to mother is 0.171-0.191 billion yuan, up year on year 15.3%-28.8%, up -4.5%-6.6% month-on-month. The RMB continued to depreciate slightly against the US dollar in the 2nd quarter of 2024. The depreciation rate was far lower than in the 2nd quarter of 2023, and the company's exchange earnings in the 2nd quarter of this year are expected to be lower than in the 2nd quarter of '23. Against the backdrop of a year-on-year decline in exchange earnings, rising raw material prices, and a sharp rise in shipping prices, the company improved overall profitability by continuously improving the performance assessment and evaluation system, developing new orders from new customers, and promoting excellent management of overseas operators. Net profit from the 2nd quarter of the 2nd quarter increased significantly in the same quarter.

The digital and energy third-curve business is expected to provide growth elasticity. According to the company's annual report for the year 23, the digital and energy business has received new projects such as solar power supply energy storage and photovoltaic inverter liquid cooling units, cooling modules for international customer generators, liquid cooling modules for energy storage for leading domestic customers, aluminum chip transformer heat exchangers such as Sanbian and Jiang Bian, and wind power transformer heat exchangers such as Hitachi Energy; the data center liquid cooling product line has expanded from containerized immersion liquid cooling products to data center liquid cooling modules, mainly serving domestic customers. As the company's ongoing projects such as heat pump board replacement and energy storage are put into operation one after another, it is expected that the digital and energy sector will maintain a high growth rate in the next few years, helping the company continue to develop rapidly.

The North American plant turned a loss into a profit, and the release of production capacity is expected to drive the profitability of overseas factories to continue to improve. The profitability of the company's overseas factories continued to increase, and the overall profit in the North American sector was achieved in the first half of the year; according to the company's announcement, the company successively received various international customer project targets such as American electric vehicle companies, European car companies' global electric vehicle platforms, European parts manufacturers, and internationally renowned machinery and equipment companies to guarantee the release of production capacity in the company's North American and European factories; the second phase of the Mexican plant will enter production phase within 2024, and it is expected that overseas factory production capacity will continue to improve.

Other revenue was slightly adjusted, and EPS for 2024-2026 was 1.05, 1.42, and 1.77 yuan respectively (previously 1.06, 1.43, and 1.79 yuan). Comparable companies are related to the automotive heat exchanger and new energy vehicle industry chain, maintaining the 24-year PE average valuation of 21 times that of comparable companies and a target price of 22.05 yuan, maintaining the purchase rating.

Risk warning

The amount of support for thermal management systems for new energy vehicles fell short of expectations, the amount of support for industrial and civil businesses fell short of expectations, and profits from overseas factories fell short of expectations.