24H1's revenue was +16% year over year, and net profit to mother was +27% year over year. The performance was in line with market expectations. The company released its 24-year semi-annual report. 24H1 achieved revenue of 6.166 billion yuan, +16% year over year; net profit to mother of 0.887 billion yuan, +27% year over year; deducted non-net profit of 0.841 billion yuan, +23% year over year; of these, Q2 achieved revenue of 3.509 billion yuan, +12% year on year, net profit of 0.524 billion yuan, +0.26% year over year. 24H1 gross margin/net profit margin was 31.75%/14.39%, +2.69/1.18pct year on year, of which Q2 gross margin/net profit margin was 32.54%/14.93%, respectively, +1.51/-0.47pct year on year. The results are in line with market expectations.

Overseas markets are making great strides, and profitability continues to improve. 24H1's overseas business revenue was 1.515 billion yuan, +40% year on year, gross profit margin was 33.82%, and year on year +1.52pct. Among them, stand-alone equipment exports achieved revenue of 1.143 billion yuan, +46% year over year, accounting for 75% of overseas revenue, and gross margin of about 41%, +0.88pct year on year. As of 24H1, China's transformer/high voltage switch export value was +26%/28%, respectively. Overseas demand continued to be strong. The company has been deeply involved in the international market for many years, and EPC has driven equipment exports with remarkable results. Industrialization/energy transformation in emerging markets such as Southeast Asia, the Middle East, and Africa has driven grid infrastructure construction needs. Looking ahead to 24H2, we expect the company's overseas business revenue+profit to maintain a high increase.

Domestic power grid construction is booming, and I am optimistic that the annual order growth will exceed expectations. 24H1's domestic revenue was 4.652 billion yuan, +10% year-on-year. Among them, switch/coil/reactive power compensation/smart equipment revenue was +10%/+50%/-9%/+35%, respectively, and gross margin was +3.76/0.7/2.65/1.23pct, respectively. Costs such as raw materials+shipping increased in the first half of the year. By strengthening cost control+fee reduction+strengthening internal management, all product lines achieved an increase in gross margin. Due to delays in grid tendering and product structure, the company's combined appliance orders declined slightly year-on-year, but as of the 4th batch of substation material tenders, the number of combined electricals/circuit breakers/isolators was +6%/31%/16%. Grid investment exceeded 600 billion dollars throughout the year, and demand for power grid construction was strong. Looking ahead to 24H2, we expect the company's domestic market orders to recover year over year, and the annual order growth is expected to exceed the target of 25%. In the future, with the promotion and release of 750kV new products+medium voltage products, I am optimistic that the company will grow steadily over the long term.

Ongoing orders are sufficient, market development+equity incentive fees have been increased, and the fee rate has increased slightly. The company's expenses for the 24Q2 period were 0.48 billion yuan, +39% year on year, and the cost rate for the period was 13.67%, +2.66pct year on year, of which the sales expense ratio was 4.54%, +0.98pct year on year, mainly to increase the impact of market development and incentive expenses. 24H1's contract debt was 1.935 billion yuan, up 30% from the beginning of the year. It had plenty of on-hand orders and capital expenditure of 0.407 billion yuan, mainly due to continuous investment in new energy factories+medium voltage switch factories.

Profit forecast and investment rating: We maintained the company's net profit of 2.07/2.59/3.05 billion yuan for 24-26, respectively, +32%/25%/18% year-on-year, corresponding PE of 25x, 20x, 17x, and 25 times PE for 25 years, corresponding to a target price of 83.5 yuan, maintaining a “buy” rating.

Risk warning: Overseas expansion falls short of expectations, domestic grid investment falls short of expectations, competition intensifies, etc.