Incident: The company released a performance forecast for the first half of 2024. 2024H1's net profit to mother was 0.158-0.185 billion yuan, up 75.10% -105.02% year on year; after deducting non-net profit of 0.15-0.175 billion yuan, an increase of 76.91% to 106.40% year on year. 2024Q2's net profit to mother was 0.1-0.127 billion yuan, up 39.92%-77.84% year on year, up 70.70%-116.95% month on month; after deducting non-net profit of 0.081-0.106 billion yuan, up 18.90%-55.83% year on year, up 53.35%-100.98% month on month.

The sharp increase in pressure is expected to drive high performance growth, and the scale effect and cost reduction of digital factories are expected to offset fluctuations in raw material prices. The company seizes industry development opportunities, accelerates the global industrial layout, and makes effective progress in market expansion. We expect that in the first half of the year, the company's revenue for boosting and conversion products will increase dramatically, demand for high-frequency inductor products will pick up, and lighting products will grow steadily on the basis of last year's low base. In terms of gross margin, the price of copper, one of the company's raw materials, increased to a certain extent in the first half of the year; on the other hand, as orders increased, the company's scale effect became more prominent. Coupled with the increase in investment in digital production lines and automation equipment in recent years, the company continued to improve quality and efficiency. We expect Q2's gross margin to be relatively stable month-on-month.

The company's direct export value is expected to increase dramatically in 24 years due to the number of new customers and new products released. We believe that the expansion of the following businesses in customers, products, and sales areas of the company is expected to begin to expand in 24 years: 1) Boosting pressure changes:

Direct export orders from other domestic photovoltaic manufacturers and overseas end customers are expected to increase significantly; 2) Box transformation: Another new product promoted by the company after the inductance and boost change, and the revenue scale is expected to increase in 24 years; 3) Allocation:

The company allocated a high export ratio in '23, and is expected to grow significantly after breaking through the capacity bottleneck in '24.

The company is speeding up overseas production capacity and is expected to establish a long-term foothold in overseas markets in the future. The company has increased its overseas transformer production capacity. Currently, the Mexican base is under construction. It is expected to be put into operation in the second half of '25. The Dallas base in the US is under construction and is expected to be put into operation in the fourth quarter of '24. We believe that in the face of potential trade risks and the gradual balance between future supply and demand in the US, the company has the advantage of brand, channel, and local production capacity layout in the North American market, and is more likely to establish a long-term foothold in overseas markets in the future.

Investment advice: The company's net profit for 24-26 is expected to be 0.351/0.463/0.567 billion yuan, respectively, or +67.7%/+31.9%/+22.4% year-on-year, corresponding PE of 20.8/15.7/12.9, maintaining a “buy” rating.

Risk warning: The growth rate of the new energy industry is declining; the expansion of new customers falls short of expectations; the progress of production expansion falls short of expectations.