Description of the event

Tuobang Co., Ltd. released its 2024 semi-annual report: the company achieved revenue of 5.016 billion yuan in the first half of the year, an increase of 17.85% over the previous year; achieved net profit due to mother of 0.389 billion yuan, an increase of 50.68% over the previous year; realized net profit deducted from non-mother of 0.373 billion yuan, an increase of 46.85% year on year. Among them, 24Q2 achieved revenue of 2.698 billion yuan, a record quarterly revenue high, up 16.37% month-on-month and 19.31% year-on-year; realized net profit of 0.204 billion yuan, up 20.32% month-on-month and 25.18% year-on-year. The 24Q2 exchange rate fluctuated less year over year, and net profit after deducting the influence of exchange gains and losses achieved a significant year-on-year increase.

Incident comments

All business segments achieved high growth. Looking at each business line: 1) The tool sector achieved revenue of 1.959 billion yuan in the first half of the year, a year-on-year increase of 20.90%, and a year-on-year increase of 1.12 pct. As demand in the downstream inventory removal industry recovered clearly, the company's share of customers other than the largest customer increased steadily, and the customer structure continued to be optimized; 2) The home appliance sector achieved revenue of 1.773 billion yuan, an increase of 18.15% over the previous year. The company increased innovative categories and high-growth categories in emerging markets to increase the value of the company's products and the share of leading home appliance customers Increased, colleagues' multi-regional layout stabilized the share of customer industry transfers; 3) New energy increased 13.74% year on year. Relying on lithium battery technology, the company made breakthrough progress in optical storage, charging and inverters; 4) The industrial control sector increased 13.82% year on year, and the company achieved significant revenue growth in 3C, wiring, carving, dispensing, clothing and other industries, with servo drive and motor systems business increasing 16% year on year. In addition, the company actively confirms demand, prototype production, and partial sample delivery with domestic humanoid robot customers to expand market opportunities in fields such as humanoid robots and low-altitude economy.

Profitability has improved markedly, and the cost control effect has been remarkable. The company's 24H1 gross margin was 23.90%, +2.32pct year on year, 8.00% year on year, +0.84pct year on year. The gross margin of several major business segments increased significantly year over year, mainly due to traditional business cost reduction and efficiency & increase in the share of autonomous and controllable products; the company's 24H1 net interest rate was 7.77%, +1.70pct year on year. Internal cost reduction and efficiency increased efficiency, and the cost control effect was remarkable. Sales/management/finance/R&D expenses rates for the second quarter were 3.7%/3.9%/-0.7%/7.6%, respectively. Compared to the decline, it was 1.1 pct.

Production capacity at overseas bases is climbing rapidly, and the negative impact of tariffs on companies is limited. Judging from the progress of overseas bases, the total revenue of the company's overseas bases in Vietnam, India, Mexico, and Romania in the first half of '24 was 1.011 billion yuan, an increase of 72.65% over the previous year; the proportion of revenue from overseas bases increased to 20.16% of total revenue, and the proportion of the company's export revenue increased to 31.19%. In view of the company's forward-looking multi-regional layout, overseas production capacity is climbing rapidly. Judging from past historical experience, the negative impact of the tariff policy on the company is limited.

Overall, since the beginning of this year, the IoT industry has seen a recovery in downstream inventory recovery, and the industry's growth rate has clearly recovered. The company's 24H1 revenue increased 17.85% year on year; at the same time, as adverse factors such as digestion & exchange of high-priced upstream raw materials weakened, the company's profitability improved, and 24H1 gross margin was +2.32pct year on year. Subsequent companies continued to launch high-value-added businesses and product structure optimization brought about by autonomous and controllable innovation categories. Profitability is expected to continue to increase. Looking ahead to the second half of the year, the company has sufficient orders, high visibility, and is expected to maintain steady growth. The company's net profit for 2024-2026 is 7.51 yuan, 0.924 billion yuan, and 1.112 billion yuan, up 46%, 23%, and 20% year-on-year, corresponding to PE of 16, 13, and 11 times, maintaining a “buy” rating.

Risk warning

1. External risks such as the macro environment;

2. Exchange rate risk.