Key points of investment:

Incident: The company announced that 2024H1 performance exceeded expectations, and revenue and profit reached new record highs in the company's history during the same period. 1) 2024H1 achieved revenue of 4.93 billion yuan (yoy +18.4%), net profit of 0.56 billion yuan (yoy +35.2%), net profit of 0.55 billion yuan (yoy +35.3%) after deducting non-return net profit of 0.55 billion yuan (yoy +35.3%), mainly due to increased sales volume and net profit per ton. 2) 2024Q2 achieved revenue of 2.57 billion yuan (yoy +18.4%, qoq +8.9%), net profit due to mother 0.3 billion yuan (yoy +25.2%, qoq +20.2%), net profit of 0.3 billion yuan (yoy +24.4%, qoq +20.9%).

Air conditioning, data centers, and liquid cooling for energy storage provide incremental market space. The price difference between copper and aluminum is widening. The current penetration rate of aluminum microchannel radiators is significantly lower than copper tube fin heat dissipation. Currently, the penetration rate in China is less than 5%, and the overseas penetration rate is 40-50%, and future market demand potential is high; demand for AI emission data centers is accelerating, power density of single cabinets is rapidly increasing, and energy storage batteries can be expected when lithium prices fall, and there is a clear trend of air cooling to liquid cooling. The company is actively developing cooling materials for the energy storage field represented by expandable plate materials, large-size water-cooled plate materials, etc., as well as 5G base stations and large base stations Data centers and other fields Heat-dissipating material.

Product structure optimization and overseas market development. 1) Guided by high value-added products, the company continues to promote composite material shipments and significantly improve the quality and level of profit; the company has targeted multiple new projects in the heat dissipation fields of major industries such as new energy vehicles, energy storage, wind power, air separation, and civil commercial air conditioning, and accurately develops various types of high-strength, corrosion-resistant, thin and environmentally friendly new alloy materials in response to the different needs of customers. 2) The foreign trade business continued to grow steadily. In the first half of the year, it dug deep into the Asian and Eastern European markets, effectively developed many overseas customers, and the number of targeted projects continued to increase. 3) A new breakthrough has been achieved in the stamping business. In 23, the company has completed the installation, commissioning and mass production of water-cooled plate presses. Thanks to the integrated advantages of zero-distance transportation of raw materials and low-cost stamping, it has developed many domestic and foreign customers, and has targeted several new projects, gradually achieving batch and stable supply. 4) Lean management, cost optimization.

It currently has a 0.5 million ton finished product supply capacity, and plans to expand Chongqing Phase II's production capacity by 0.15 million tons (for new energy vehicles). 1) Capacity expansion: The company is increasing back-end cold rolling and multi-specification shearing machines in due course, and has a 0.5 million ton finished product supply capacity. In addition, the company plans to build Chongqing Phase II with a production capacity of 0.15 million tons. 2) Cost reduction: Compared with the Shanghai base, Chongqing has lower energy costs and higher yield, and the company actively implements lean production management, leaving room for downward processing costs.

Maintain a buy rating. The company is a leading aluminum company for automotive thermal management. After the new Chongqing base is fully put into operation, the industry pattern is stable. The company leads its peers in product yield, cost control capacity, and profitability. It already has liquid cooling material products related to automobiles, air conditioning, energy storage, and data centers, which will fully benefit from the demand volume of related industries. Maintaining the original profit forecast, the company's net profit for 24-26 is estimated to be 1.25/1.6/1.9 billion yuan, which corresponds to PE of 14/11/9 times, maintaining the purchase rating.

Risk warning: product processing costs fall; Chongqing base construction falls short of expectations; international trade frictions