Core views:

The number of charging piles continues to resonate with the recovery of traditional business. 24H1's performance is high, and the logic continues to be fulfilled.

According to the interim report issued by the company, 24H1 achieved revenue of 1.84 billion yuan, a year-on-year increase of 27.2%, achieved net profit of 0.39 billion yuan, a year-on-year increase of 104.5%, and realized deducted non-net profit of 0.29 billion yuan, an increase of 52.6% over the previous year, and non-recurring profit and loss of about 0.1 billion yuan, mainly from the parent company's disposal of Sibang Technology's shares in the current period to confirm investment income. We continue to be optimistic about the growth prospects of the company's charging pile business in 2024. We are relatively cautiously optimistic about the traditional business in 2024, and expect the traditional main business to maintain steady growth. Take the software cloud service business as an example (this business is also highly compatible with the comprehensive diagnostic equipment business boom). The amount of software cloud service due within one year at the end of the 2024Q2 period was 0.29 billion yuan, an increase of about 3% over the same period last year and an increase of about 12% over the end of 2023. This data shows that the company's software upgrade cloud service business is still on a steady growth channel.

The US factory is officially put into operation, and I am optimistic that the charging pile business will continue to expand in the future. The company continues to promote overseas production capacity. According to the company's 2023 annual report, the US factory was officially put into operation at the end of 2023, and the company became one of the Chinese new energy companies that built and put into operation in the US and met the requirements of the US NEVI and BABA laws. Judging from industrial logic, the charging pile business is expected to expand significantly, driving continued improvement in performance. (For detailed logic, see the previous in-depth report “Charging pile business is about to expand, and it is expected to open up a new growth curve”)

Profit forecasting and investment advice. We maintain our previous profit expectations. We expect the company's net profit to be 0.574 billion yuan, 0.649 billion yuan, and 0.783 billion yuan respectively in 2024-2026, corresponding to EPS of 1.27 yuan/share, 1.44 yuan/share, and 1.73 yuan/share. Referring to the latest valuation of comparable companies in 2024, considering that the company is expected to achieve rapid performance growth in 2024-2025, the company can be given a reasonable valuation ratio of 25 times PE in 2024, with a reasonable value of 31.74 yuan/share to maintain a “buy” rating.

Risk warning. The uncertainty of the RMB exchange rate; the uncertainty of overseas market policy; the uncertainty of expanding the new energy business; the uncertainty of the overseas economy.