Incident: On July 16, the company announced that it formally signed a comprehensive cooperation agreement with Huawei to cooperate in the fields of cloud computing, AI big models, smart parks, and digital operations. This cooperation will make full use of the company's industrial advantages and Huawei's technical advantages, use Huawei's technology accumulation in the field of AI models to empower the company's products, and create a demonstration project integrating AI+ traditional industries.

Lay out post-market services and create a second growth curve. On June 27, the company announced that it plans to invest 0.2 billion yuan to establish a wholly-owned subsidiary, Huayun Zhiyuan, to be responsible for the research and development of intelligent equipment operation and maintenance systems and begin to lay out post-market services. Currently, in addition to leading overseas companies with aftermarket service teams, domestic and overseas transportation equipment maintenance is mostly handled by third party agencies, which are expensive and inefficient. After entering the market service, the company is expected to quickly seize the market with cost-effective services through its own technology accumulation and create a second growth curve.

Overseas markets are expanding smoothly, and on-hand orders have repeatedly reached new highs. Since 2023, the company has followed the simultaneous advance of going overseas and has established an overseas business headquarters in Singapore, focusing on developing markets in countries and regions such as Africa, Southeast Asia, South America, Australia, the Middle East, and India. Using the cooperation of the Simandou iron ore project, the Western Cement Ethiopia project, China Steel Brazil Company, and Indonesia's Sanlin Company as an opportunity to further develop 40 of the world's largest mining customers. In 2023, the company successfully won the bid for Baowu Group's Ximangdu iron ore project with a bid amount of 1.28 billion yuan; in June 2024, it won the bid for the Western Cement Uganda project, which is expected to achieve revenue of 0.11 billion yuan, and the pace of overseas expansion is smooth. By the end of the first quarter of 2024, the company had on-hand orders of 2.4 billion yuan, accounting for more than 70% of overseas orders. Sufficient orders will protect the company's future performance.

Acquire an Australian shipping giant to accelerate its global layout. The company Australian Sun Company acquired 100% of Wiley Conveyor, Uni-Rod, and Tyton's shares and related intellectual property rights held by Wiley Limited for 8 million Australian dollars on June 29. This foreign investment will help the company to better explore the international market, meet the needs of overseas customers, and improve the level of customer service. After the acquisition is completed, the company will use Wiley Group's existing brand and sales channels to further enhance the company's brand awareness and industry competitiveness, and at the same time open up the Australian market and accelerate the global layout.

Profit forecasting and investment advice. The company's net profit for 2024-2026 is expected to be 0.176, 0.283, and 0.376 billion yuan respectively. The compound net profit growth rate for the next three years will be 54.3%, maintaining a “holding” rating.

Risk warning: risk of raw material price fluctuations; risk of overseas market expansion falling short of expectations; risk of exchange rate changes.