Incident: The company announced its 2024 semi-annual results forecast on July 15. It is estimated that 24H1 revenue will be 2.4-2.5 billion yuan, +124% to 133%; net profit to mother 0.135-0.155 billion yuan, an increase of 0.201-0.221 billion yuan; net profit after deducting non-attributable net profit of 0.138-0.158 billion yuan, an increase of 0.202-0.222 billion yuan year-on-year. Excluding the impact of equity payments, net profit not attributable to mother was 0.201-0.221 billion yuan, an increase of 0.258-0.278 billion yuan over the previous year. Our review is as follows:

Q2 Revenue increased sharply in a single quarter over the same period last month, mainly due to the launch of 50M high-end mobile phone products and the increase in sales volume of smart security products. According to estimates, Q2's revenue in a single quarter is expected to be 1.563-1.663 billion yuan, +153% to 169%, and +87% to 99% month-on-month. The main factors are: (1) In the smartphone sector, the company's shipments of high-end 50M products used in flagship phone main cameras, wide-angle, and telephoto lenses have risen sharply, driving a significant increase in the company's revenue in the smartphone sector; (2) The competitiveness of new smart security products has increased significantly.

Q2 single-quarter results reversed year-on-year losses and increased sharply month-on-month. The main reason was that after revenue increased, expense ratios were significantly diluted and profitability improved. According to estimates, Q2's net profit for the single quarter was 0.121-0.141 billion yuan, up 0.162-0.182 billion yuan year on year, 0.107-0.127 billion yuan; net profit after deducting non-return to mother was 0.118-0.138 billion yuan, up 0.157-0.177 billion yuan year on year, and 0.098-0.118 billion yuan year-on-year. The profit margin for the single quarter in Q2 reached 7.28 to 9.02%, while 23Q2 was -6.58% and 24Q1 was 1.68%. Profitability increased significantly, mainly due to the launch of high-end mobile phone products, which raised the revenue level by one level, and various expense ratios declined accordingly.

Maintain an “overweight” investment rating. The company's high-end smartphone products have entered a harvest period and are expected to become an important growth engine for the next three years. At the same time, smart security and automotive products are also continuing to expand the product line and new customers. It is recommended to focus on customer expansion and share growth in the company's various businesses, especially high-end mobile phone products. Revenue forecast for 24-26 will be 4.929/6.531/8.346 billion yuan, net profit to mother of 0.327/0.546/0.766 billion yuan, corresponding EPS 0.82/1.36/1.91 yuan, corresponding PE 69.3/41.6/29.6 times, maintaining an “incremental” investment rating.

Risk warning: New product development falls short of expected risk, downstream demand falls short of expected risk, industry competition increases risk, technology iteration risk, macroeconomic and policy risk.