The 2024 mid-year report showed excellent performance. We are optimistic that the company will deliver its 2024 semi-annual report, achieving operating income of 0.137 billion yuan, an increase of 42.04% year on year; achieved net profit attributable to shareholders of listed companies of 56.452 million yuan, an increase of 38.07% year on year; and achieved net profit of 47.4866 million yuan after deducting non-recurring gains and losses attributable to shareholders of listed companies, an increase of 59.99% year on year. The performance continues to be excellent, and I am optimistic that the company's product market penetration rate will increase and future performance will continue to be realized.

Major operating contracts and orders were signed, and the downstream volume trend was highlighted

The company issued an announcement on July 5, 2024 to sign a daily operating and sales contract with the customer to sell a batch of gyroscope and accelerometer products to customer Q and its branch customer P. It is expected that the contract will be completed by December 31, 2024, with a contract amount of approximately RMB 0.1222 billion (tax included). The contract details the sale of a number of gyroscope and accelerometer products. It became the largest sales order publicly issued by the company since its listing, and the downstream volume trend is gradually showing.

Designated smart driving customers, the civilian market is ready to go

The company issued an announcement on July 24, 2024, and received a fixed notice from a well-known domestic automobile company (the specific name of the customer cannot be disclosed according to the confidentiality agreement with the customer, hereinafter referred to as the “customer”).

The customer selects the company as the supplier of parts. The specific product supply time, price and supply volume are subject to the signed supply agreement and sales order. Further enhancing the company's influence in the automobile market is conducive to enhancing the company's overall competitiveness.

Investment advice

We are optimistic about the long-term development of the company. The high reliability+civilian market is expected to support the company's high revenue growth in the next few years. The profit forecast is: 2024-2026 is 0.472/0.684/0.968 billion yuan; the projected net profit for 2024-2026 is 0.237/0.326/0.402 billion yuan, respectively; and the corresponding EPS for 2024-2026 is 0.59/0.82/1.01 yuan. The PE corresponding to the company's current stock price is 49/36/29 times, maintaining a “buy” investment rating.

Risk warning

1) Breakthroughs in technology research and development fall short of expectations; 2) downstream demand falls short of expectations; 3) loss of core technical personnel; 4) large fluctuations in raw material costs affect gross profit margin; 5) Market competition increases the risk of affecting gross margin.