Incident: The company announced its 24-year interim results forecast. 24H1 expects to achieve net profit of 0.72 to 0.08 billion yuan, +25.41 to 39.35% year on year; net profit without deduction of 0.62 to 0.07 billion yuan, or +36.38 to 53.98% year on year.

Q2 Profit growth continues to be steady and high. Q2 The company expects to achieve net profit of 0.43 to 0.051 billion yuan, +33 to 58% year on year; net profit without deduction of 0.38 to 0.046 billion yuan, +17 to 42% year on year. We expect mergers and acquisitions such as Q2 Songyang Compressors and Songyang Chillers to contribute greatly to the company's profits, while the company's original main business is gradually being strengthened.

Or benefit from the equipment renewal policy and look forward to order performance in the second half of the year. The “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-in” issued by the State Council mentions equipment renewal and transformation in key industries, with energy saving and carbon reduction, ultra-low emissions, safe production, digital transformation, and intelligent upgrading as important directions; promoting energy-saving transformation of existing buildings. The company has a complete industrial chain in ambient air conditioning, industrial refrigeration and heating, etc., and is expected to benefit from increased orders brought about by equipment updates in various fields in the second half of the year.

Profit forecast and investment rating: We expect the company to achieve operating income of 5.395/6.122/6.728 billion yuan in 24-26, +12.0%/+13.5%/+9.9% year-on-year, and expect to achieve net profit of 0.169/0.296/0.367 billion yuan, +242.7%/+75.1%/+24.0% year-on-year. The corresponding PE is 18.14/10.36/8.36 times, maintaining the “buy” rating.

Risk factors: The bid for the company's engineering projects fell short of expectations, the promotion of high-standard projects fell short of expectations, the promotion of cold chain logistics policies fell short of expectations, the integration of Panasonic refrigeration assets fell short of expectations, and large fluctuations in raw material costs.