Event Overview: The company released the 2024 semi-annual report, with 2024H1 revenue of 0.97 billion yuan, +14.06%; net profit to mother of 0.038 billion yuan, +101.60% year over year; net profit excluding non-return of 0.032 billion yuan, +143.72% year on year; of these, 2024Q2 revenue was 0.481 billion yuan, +4.04% year on month, -1.80% month on month; net profit to mother 0.021 billion yuan, year on year +65.19 %, +30.58% month-on-month; net profit without return to mother was 0.017 billion yuan, +86.52% YoY, +18.13% month-on-month.

Revenue grew steadily, and profitability improved markedly. 1) Revenue side: 2024Q2 revenue 0.481 billion yuan, +4.04% YoY, -1.80% YoY growth was mainly due to steady growth in the chassis parts business; 2) Profit side: 2024Q2 net profit of 0.021 billion yuan to mother, +65.19% YoY, +30.58% month-on-month, after deducting non-0.017 billion yuan, +86.52% YoY and +18.13% month-on-month. 2024Q2 gross margin reached 19.37%, +1.25pct year on year, +0.33pct month-on-month, net profit margin 4.46%, +1.65pct yoy, +1.10pct month-on-month. The company's profitability increased dramatically, mainly due to the gradual release of scale effects and internal cost reduction and efficiency results; 3) On the cost side, 2024Q2 sales/management/R&D/finance cost rates were 3.13%/4.65%/5.59%/1.63%, respectively, +0.94/-0.21/+0.90/ -0.03pct, respectively, and +0.19/-1.21/+0.94/+0.27pct, respectively. The year-on-year increase in sales and R&D expenses is mainly due to the increase in promotion and service costs incurred by the company to expand its business, and the continuous investment of R&D personnel and material costs to support new projects.

The chassis parts business remains steady, and mass production of new products is climbing, leading to an increase in orders. The company has been deeply involved in the automotive chassis field for more than 20 years. It has maintained a dominant position in the domestic steering gear rack and shock absorber piston rod segment for many years. 2024H1, the company sold 13.7434 million steering gear parts, +13.50% year over year, and sales volume of shock absorber parts reached 21.1463 million parts, +9.94% year over year, and the chassis parts business remained steady. Some of the new products have climbed into mass production, bringing increased orders to the company, including IPB-Flange, the core component of Bosch's intelligent integrated braking system, ZF CDC damping control valve parts, Nexteer gears, and racks.

Focus on the construction of screw production lines for humanoid robots and the production of screw parts continues to advance. The company focuses on the construction of screw production lines for humanoid robots, and has formed a complete process equipment configuration, including rough turning equipment, hard turning equipment, heat treatment and hardening machines, cylindrical grinders, thread grinders, testing equipment, experimental analysis instruments, etc., so that all processes can be independently completed by the company, and a single-process automation solution can be realized. The company continues to cooperate with customers to develop samples of various types of screw components, including nuts, planetary rollers, screws, gears, etc., which are used in humanoid robot actuators and automobile rear wheel steering systems.

Investment suggestions: leading chassis segment, continuous development of new products and customers; lightweight+robots build two and three growth curves, with expected revenue of 2.141/2.507/2.985 billion yuan respectively in 2024-2026, net profit of 0.085/0.122/0.179 billion yuan, EPS 0.24/0.34/0.50 yuan, respectively, corresponding to the closing price of 15.99 yuan/share on August 14, 2024, PE is 68/47/32 times, respectively.” Recommended” ratings.

Risk warning: Raw material prices fluctuated beyond expectations, the pace of mass production of humanoid robots fell short of expectations, and customer targeting fell short of expectations.