Incident: On July 30, the company released its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 5.016 billion yuan, +17.85% year-on-year, and achieved net profit of 0.389 billion yuan, or +50.68% year-on-year.

Industry sentiment continued to pick up, with outstanding performance in Q2:2024H1, the company achieved revenue of 5.016 billion yuan, +17.85% year over year, and achieved net profit of 0.389 billion yuan, +50.68% year over year; looking at Q2 alone, achieved revenue of 2.698 billion yuan, a new quarterly revenue high, up 16.37% month-on-month, up 19.31% year on year, and achieved net profit without return to mother of 0.204 billion yuan, up 20.32% year on year 25.18% Mainly due to factors such as the recovery in industry prosperity, cost reduction and efficiency in the company's old business, technological innovation in new business, and the impact of exchange rate depreciation, the company's performance has maintained rapid growth.

All business segments continued to grow, and the growth curve was improved: 2024H1, the company's business maintained a growth trend. Among them, 1) the tool business achieved revenue of 1.959 billion yuan, +20.90% year over year, gross profit margin of 24.62%, and +1.12pct year over year. As the company's first business, the share of revenue increased further, and the revenue share increased from 36.05% in 2023 to 39.05% at the end of the first half of 2024; 2) The home appliance business achieved revenue of 1.773 billion yuan, year on year +18.15 %, mainly due to inventory digestion in the home appliance industry and the recovery in industry sentiment. At the same time, the company's products focus on high-growth categories and continue to empower customers, and is expected to maintain a steady growth trend in the future with the intelligent upgrading of the industry; 3) The new energy business achieved revenue of 1.04 billion yuan, +13.74% year over year. Specifically, the energy storage business achieved revenue of 0.76 billion yuan, +13.74% year on year. The new energy vehicle business achieved revenue of 0.28 billion yuan, +14.43% compared with the company's technical reserves The rich and continuous expansion of new product categories is expected to continue to contribute to performance growth; 4) The industrial control sector achieved revenue of 0.156 billion yuan, +13.82%, of which sales of servo products increased by more than 30% year on year, mainly due to the company's significant revenue growth in the 3C, wiring, carving, dispensing, clothing and other industries. In the field of robotics, the company's hollow cup motors have an early layout, the first tier of domestic technology, and a high share of pioneering advantages in the field of humanoid robots. The company actively participated in sample delivery for humanoid robot customers and expanded the humanoid robot and low-altitude economy Market opportunities in other fields have created a fourth growth curve.

Profitability has improved, and three-rate control has paid off: 2024H1. At the same time, the company increased cost reduction and efficiency of the old business, and enhanced overall profitability through technological innovation and the addition of new products. The gross margin for the first half of the year was 23.90%, +2.32pct year on year, and the gross margin of all sectors increased year on year. Furthermore, the gross margin of the export business benefited from a slight depreciation of RMB in the first half of the year; the net margin was 7.77%, +1.7 pct year on year. From the cost side, 2024H1's total expenses increased by about 0.098 billion yuan year on year, mainly due to investment in new businesses and new markets. Among them, R&D expenses increased by 0.071 billion yuan year on year, mainly for new product development, accelerating the integration and application of new technologies such as AI, IOT, and 5G, and increasing R&D investment in new businesses and new technologies; sales expenses increased 0.038 billion yuan year on year, mainly due to the increase in domestic and foreign exhibition fees and new business market development expenses formed by the company's market development in the first half of the year; Management expenses decreased by 0.011 billion yuan year on year, mainly due to the company's measures to optimize internal management and improve operating efficiency. Expenses decreased year over year.

Cash flow improved significantly month-on-month, and inventory turnover increased: Q2 The company's operating cash flow was 0.371 billion yuan, +272.82%, lower in the first quarter, mainly due to increased demand, the company's expenditure on purchasing raw materials increased, and the company's expenses for purchasing raw materials and remuneration paid to employees decreased month-on-month in the second quarter, achieving a significant month-on-month increase in net cash flow from operating activities. According to Wind data, 2024H1's inventory turnover ratio was 2.18, up 0.4 year on year, and accounts receivable turnover ratio was 1.96, +0.28 year on year, which also showed a marked improvement in the company's business situation.

Profit prediction and investment rating: The company is a leading intelligent controller enterprise with core competitive advantages such as platform-based technology innovation capabilities, partner customer service capabilities, and systematic rapid response capabilities. Currently, the company has become a leader in intelligent control solutions in the home appliance and tool industry, leading innovation in the new energy and industrial industries, and is optimistic about the company's long-term steady development. The company's net profit for 2024-2026 is estimated to be 0.722/0.93/1.198 billion yuan, respectively. The current stock price corresponds to PE 18/14/11 times, respectively, to maintain a “buy” rating.

Risk warning: Customer growth falls short of expectations, raw material price fluctuation risk, exchange rate risk, macro-environment fluctuation risk.