Matters:

The company announced its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 1.842 billion yuan, an increase of 27.22% year on year; achieved net profit of 0.387 billion yuan, an increase of 104.51% year on year; realized net profit deducted from non-mother 0.289 billion yuan, an increase of 52.59% year on year.

Ping An's point of view:

The company achieved a high profit increase in the first half of 2024. Revenue side: In the first half of 2024, the company achieved revenue of 1.842 billion yuan, a year-on-year increase of 27.22%, and the company achieved rapid revenue growth. Among them, the digital maintenance business achieved revenue of 1.438 billion yuan, an increase of 18.04% year on year; the digital energy business achieved revenue of 0.378 billion yuan, an increase of 92.37% year on year. Profit side: In the first half of 2024, the company achieved net profit of 0.387 billion yuan to mother, an increase of 104.51% over the previous year. In the second quarter of 2024, the company completed a 5% share transfer to its subsidiary Cybertech. Cybertech is no longer included in the company's consolidated statements. The share transfer has already been implemented, generating investment income of 98.7423 million yuan, accounting for 23.96% of the company's total profit for the first half of 2024. Excluding the impact of non-recurring profit and loss, the company achieved net profit without return to mother of 0.289 billion yuan in the first half of 2024, achieving a rapid increase of 52.59% over the same period last year. Overall, the company's performance improved in the first half of 2024, mainly because the company continued to stabilize its leading edge and profitability in the automotive diagnosis business based on its core advantages in full-scenario products and solutions, international management capabilities, brands and channels, while also focusing on strategic development opportunities for overseas new energy charging networks.

The company invigorates the NEV diagnostic market and opens up incremental market space. The company actively expands the broad space of the NEV diagnostic market through continuous product and technological innovation. 1) In terms of products, the company launched tool chain products for high-voltage lithium battery maintenance, maintenance and replacement scenarios, including the 280V battery charger MaxiEVCDT100, the 24-channel cell balancer MaxiEVBCE100, the 30KPA battery pack air tightness tester MaxiEVALT100L, and the 1000V insulation tester MaxiEVITS1004 products. The products have reached industry-leading levels in terms of safety, test accuracy and ease of use. The company's products have achieved full-scene diagnosis scenario coverage from the top of the car to the bottom of the vehicle. 2) In terms of technology, the company continues to make breakthroughs in product coverage and diagnostic efficiency around new energy diagnosis, and has developed a high-voltage battery expert model based on image recognition algorithms and machine learning for problems such as complicated matching relationships between vehicles and batteries and difficulties in obtaining battery information. The company's NEV coverage continues to increase. It has supported 220+ vehicle brands and 1500+ models, maintaining industry leadership. Under the trend of intelligence, advanced driver assistance systems have reduced the frequency of automobile collision maintenance while greatly increasing the maintenance and replacement demand for various intelligent sensors. The future development of the NEV aftermarket is worth looking forward to.

AI supports the upgrading of intelligent charging network solutions, and the company's overseas new energy charging business has great potential for development. In the first half of 2024, the company focused on a comprehensive upgrade of smart charging network solutions. 1) In terms of charging equipment, the company has further improved its product matrix. The MaxiChargerAcPro, which was recently launched in the first half of 2024, is specially designed for commercial and residential use, leading the market with a high power of 19.2kW (80A), far exceeding traditional household standards (12kW, 50A). 2) In terms of charging software and solutions, the company continues to develop and improve the three major products of charging operation management platform, remote operation and maintenance management platform, and charging app to promote the evolution and upgrading of full-scenario solutions. At the same time, the company is actively developing overseas new energy charging business. Currently, the product matrix covers full-scene intelligent charging network solutions and one-stop optical storage and charging energy management solutions. In the North American market, the company successfully signed contracts with a number of leading global enterprise customers, and the number of strategic customers and order size increased significantly. In the European market, the company has successfully signed contracts with a number of major regional customers and established strategic partnerships with a number of internationally renowned energy companies to jointly promote the construction and popularization of new energy charging stations in key countries and regions. According to the International Energy Agency's estimates, the number of public charging stations in the US/Europe/other overseas markets will increase from 0.18/0.7/0.29 million in 2023 to 1.7/2.7/2.4 million in 2035. The company's overseas new energy charging business has great potential for future development.

Profit forecast and investment advice: According to the company's 2024 semi-annual report, we maintain our performance forecast. The company's net profit for 2024-2026 is 0.637 billion yuan, 0.706 billion yuan, and 0.885 billion yuan, respectively, and EPS is 1.41 yuan, 1.56 yuan, and 1.96 yuan, respectively. The PE corresponding to the closing price on August 2 is about 18.2 times, 16.4 times, and 13.1 times, respectively. The company focuses on R&D, production, sales and service of new energy charging piles, comprehensive automotive diagnosis, inspection and analysis systems, and automotive electronic components. The sales network has covered more than 120 countries or regions around the world, including North America, Europe, China, Asia Pacific, South America, and IMEA (India, Middle East, Africa). The company actively grasps the development trend of the automotive industry, accelerates the Group's strategic transformation, focuses on the core NEV business, and actively promotes the NEV business overseas. Currently, the company's new energy intelligent charging business is developing rapidly, and the expansion of new energy charging pile products in the European and American markets has borne fruit. The new energy business has broad prospects for future development and has become a new engine for the company's development. We continue to be optimistic about the company's future development and maintain a “recommended” rating for the company.

Risk warning: (1) Product iterations fall short of expectations. Strong product iteration ability is an important part of the company's product core competitiveness, and is the key to maintaining the company's competitive advantage. If future product iterations fall short of expectations, there will be a risk that the market competitiveness of the company's products will decrease, and the company's future development will be affected. (2) Market expansion falls short of expectations. At present, the company's sales network has covered more than 120 countries or regions around the world, including North America, Europe, China, Asia Pacific, South America, and IMEA (India, Middle East, Africa), and has initially formed an integrated global marketing network. However, if the market development in the newly developed regions of the company falls short of expectations, it will affect the expansion of the company's global marketing system. (3) The development of the new energy charging pile business fell short of expectations. Currently, the expansion of the company's new energy charging pile products in the European and American markets has borne fruit. If the future market acceptance of the company's new energy charging pile products falls short of expectations, then there is a risk that the company's new energy charging pile business will not meet expectations.