Incident: The company released the 2024 semi-annual report performance forecast. 2024H1 achieved net profit of 6.1 to 0.68 billion yuan, +19.9% to +33.7% year over year, median value of 0.65 billion yuan, +26.8% year over year; realized net profit without return to mother 5.9 to 0.66 billion yuan, +19.0% to +33.1% year over year, median value of 0.63 billion yuan, and +26.0% year over year.

On a quarterly basis, 2024Q2 achieved net profit of 3.0 to 0.37 billion yuan, +12.8% to +39.0% year over year, -2.3% to +20.4% month-on-month, median value of 0.34 billion yuan, +25.9%/+9.0% month-on-month; Q2 achieved non-return net profit of 2.9 to 0.36 billion yuan, +11.8% to +38.4% year over year, and -0.2% to +23.5% month-on-month, median value of 0.33 billion yuan, month-on-month + 25.1%/+11.7%. We expect the company's Q2 revenue to be around 3 billion yuan, with a net profit margin of 9.9% to 12.2%, and a median value of 11.0%. The performance exceeded market expectations.

Orders from leading customers continue to increase, deepening cost reduction and efficiency to drive steady growth in profit levels. According to SNEresearch data, the global power battery load from January to May 2024 was 285.4 GWh, +23.0%. The company formed stable supply relationships with leading global battery companies such as Ningde Times, China Airlines, Everweft Lithium Energy, and LG, and customer orders for precision structural parts of the company's power batteries continued to increase. At the same time, the company deepens cost reduction and efficiency, and continues to make efforts to improve costs and operational efficiency to help achieve steady growth in profit levels.

The US factory construction plan has been implemented, and overseas sales have strengthened the leading edge. On May 21, the company announced that it plans to jointly fund and build a production base for precision structural parts of new energy power batteries in the United States with a subsidiary. The project mainly produces precision structural parts for power and energy storage batteries, all of which will achieve an annual output value of about 70 million US dollars after delivery. At present, the company's first factory in Hungary has reached full production, and the German and Swedish plants are also expected to gradually expand this year. The company's share of overseas revenue is expected to increase rapidly. We expect the profit margin level of overseas products to be better than at home, and the company's leading position in lithium battery structural components is stable.

Investment advice: Consider that the company's overseas business is progressing smoothly, product profitability is strong, and the company's leading position in lithium battery structural components is stable. We expect the company to achieve net profit of 1.453/1.817/2.186 billion yuan in 24-26, +21.0%/+25.0%/+20.3% year-on-year, corresponding EPS of 5.37/6.71/8.08 yuan, giving it a “buy” rating.

Risk warning: downstream demand falls short of expectations; overseas production capacity construction falls short of expectations; industry competition intensifies.