Incident: On July 9, the company released the 2024 semi-annual performance forecast. In the first half of 2024, the company achieved net profit of 0.4-0.42 billion yuan, an increase of 40.12% to 47.12% over the previous year, and achieved net profit deducted from non-mother of 0.35-0.37 billion yuan, an increase of 35.36%-43.09% over the previous year. Q2 is expected to achieve net profit of 0.208-0.228 billion yuan, a year-on-year increase of 30.8%-43.4%. It is expected that Q2 will achieve net profit without deduction of 0.171-0.191 billion yuan, an increase of 15.5%-29.1% year-on-year.

The supporting share and supporting value of various business segments increased, and the profitability of overseas operators improved markedly:

In the first half of the year, the company overcame adverse factors such as rising raw materials and rising shipping costs, and achieved a pre-increase in performance.

The main reasons are: 1) Comprehensively deepening the transformation, promoting a solid foundation, reducing costs and increasing efficiency, improving quality, and excellent operation, and gradually achieving results. 2) Further accelerate the improvement of the performance appraisal and evaluation system, increase rewards for efficiency improvement, stimulate employees' enthusiasm and creativity, and accelerate efficiency improvement. 3) The profitability of overseas operators improved markedly. In particular, the North American sector turned a year-on-year loss into a profit. 4) The supporting share and supporting value of various business segments increased, driving the continuous growth of orders.

The triple curve business is making concerted efforts to help continue to grow in performance: 1) In terms of non-road commercial vehicles, the company continues to maintain its leading edge in product technology to ensure continued increase in domestic market share and use global territorial advantages to accelerate international business expansion; 2) In terms of new energy heat management systems, around the 1+4+N product system, it ensures leading positions in products such as front-end modules, air conditioning box modules, electronic chip cooling modules, etc., and expand the application of thermal management systems, thermal management integrated modules and key components for new energy commercial vehicles and non-road construction machinery, and increase the application of core thermal management systems, thermal management modules and key components such as electronic electronic control Investment in R&D of system product technology; 3) In terms of digital and energy thermal management, the advantages of automotive thermal management technology enable energy storage, power transformation, overcharging, data centers, etc., to achieve competitive advantages in technical performance, manufacturing costs, and product quality. Currently, the data center server liquid cooling business has achieved zero customer breakthroughs, and the energy storage supercharged liquid cooling unit business continues to grow.

Investment advice: We expect the company to achieve net profit of 0.833/1.166/1.5 billion yuan in 2024-2026.

The corresponding PE was 17.25/12.32/9.58 times, respectively, maintaining the “gain” rating.

Risk warning: the development of liquid cooling technology falls short of expectations; prices for new energy vehicle parts are falling short of expectations; downstream customer production and sales fall short of expectations.