Key points of investment:
Incident: The company released its 2024 interim report on July 30, 2024. In the first half of 2024, it achieved operating income of 1.431 billion yuan, +29.84% year on year; net profit to mother of 0.181 billion yuan, +0.02% year on year; gross profit margin 39.57%, -1.96pct year on year; net profit margin 12.53%, year-on-year. The company achieved revenue of 0.832 billion yuan in Q2 2024, +27.11% year-on-year, and net profit to mother 0.115 billion yuan, or -3.12% year-on-year. The company's revenue grew steadily, and gross profit was under slight pressure in the short term. By sector, the company's energy storage business achieved revenue of about 0.465 billion yuan in the first half of the year, up 19.59% year on year; electric vehicle charging equipment achieved revenue of about 0.556 billion yuan, an increase of 44.83% year on year, and continued high growth; battery testing and chemical equipment achieved revenue of 0.126 billion yuan, an increase of 35.45% year on year; and industrial supporting power supplies achieved revenue of 0.251 billion yuan, an increase of 17.38% year on year. The company's performance was in line with expectations, and the charging pile business performed steadily.
High growth in the domestic market is driving the growth of the energy storage business, and a recovery in overseas demand is expected to drive better performance. In the first half of 2024, the energy storage business achieved revenue of about 0.465 billion yuan, a year-on-year increase of 19.59%, and gross margin of over 30%, mainly due to the company's solid product and technical reserves. Looking at the domestic market, the domestic energy storage installed capacity is growing fast. According to the Energy Administration data, 24H1's new domestic energy storage installed capacity was 32.19 GWh, an increase of 81.66% over the previous year, driving the rapid expansion of the company's domestic energy storage business. Looking at overseas markets, demand for industrial and commercial storage is poor due to the delay in US interest rate cuts, but over the long term, with the gradual implementation of interest rate cuts, demand for US commercial and commercial reserves is expected to take a turn.
Demand for the charging pile business is strong, and growth at home and abroad resonates. In the first half of 2024, electric vehicle charging equipment achieved revenue of about 0.556 billion yuan, a year-on-year increase of 44.83%, gross margin of nearly 40%. The charging pile business developed steadily and performed well, mainly due to the rapid development of the domestic, European and American charging pile industries. The company forwardly laid out the European charging pile market, and also obtained American standard charging pile certification, gradually expanding the US market.
Gross profit margin is under pressure in the short term, and is expected to gradually pick up in the future as industry demand improves. The company's gross margin for the first half of 2024 was 39.57%, -1.96pct year on year. The decline in gross margin was mainly due to the decline in gross margin of the energy storage business combined with a gradual increase in the share of revenue. The gross margin of the energy storage business in the first half of 2024 was 30.01%, -5.63pct year on year. Although the company's gross margin was slightly pressured in the short term, revenue grew steadily. From a full-year perspective, the company continued to expand overseas sales channels, and made joint efforts in the energy storage, charging pile, battery testing and chemical equipment business, maintaining the trend of contrarian growth in the industry's downward cycle. We expect the company's performance to pick up in the second half of the year. We are optimistic about the growth of the company's overseas energy storage orders and the development of the charging pile business market after interest rate cuts are implemented.
Profit forecast and investment rating: Based on the rapid development of the company's energy storage business and charging pile business, and the impact of a slight decline in the overall growth rate of the industry, we adjusted the company's 2024/2025 net profit forecast to 0.469/0.737 billion yuan (previous value was 0.524/0.717 billion yuan), adding a 2026 net profit of 0.936 billion yuan (2024/8/1 stock price) corresponding to PE14/9/7X, maintaining the “buy” rating.
Risk warning: demand for energy storage and charging piles falls short of expectations; industry competition intensifies; risk of international trade friction, etc.