Incident: Kodali released its 2024 semi-annual report: the company's 24H1 revenue was 5.446 billion yuan, up 10.75% year on year; realized net profit of 0.648 billion yuan, up 27.38% year on year; realized net profit deducted from non-mother of 0.628 billion yuan, up 26.68% year on year, and performance was in line with expectations.

Q2 Performance showed steady year-on-month growth. Looking at a single quarter, the company's 2024Q2 revenue was 2.937 billion yuan, up 13.36% year on year, up 17.09% month on month; realized net profit of 0.339 billion yuan, up 27.03% year on year, up 10.02% month on month; realized net profit without return to mother 0.333 billion yuan, up 26.34% year on year, up 12.81% month on month.

Demand in the industry is strong, and the company's profit follows the growth of the industry. According to data from the Institute of Advanced Industrial Research, in the first half of 2024, China's power battery installed capacity was about 200.6 GWh, up 40% year on year; global power battery installed capacity was about 346.5 GWh, up 15% year on year; in the first half of 2024, China shipped 116 GWh of energy storage lithium batteries, an increase of 41% year on year. The company's 24H1 lithium battery structural component revenue was 5.242 billion yuan, an increase of 11.62% over the previous year. The company maintained a steady increase in profit levels in line with industry demand through continuous cost reduction and efficiency. As the peak season approaches in the second half of the year, the company's performance is expected to grow further.

Profitability remains steady. The company's 24Q2 gross margin was 23.82%, up 1.64pcts month-on-month, and 0.02pcts year-on-year, mainly due to Q2 volume and price increase, and cost reduction and efficiency; net interest rate was 11.51%, down 0.79pcts month-on-month, and 1.15pcts year-on-year increase. The month-on-month decline in net interest rate was mainly due to an increase in R&D expenses and a month-on-month decrease in VAT input deductions.

Overseas bases are expected to contribute to resilient performance. 24H1's overseas revenue was 0.295 billion yuan, an increase of 11.38% over the previous year, and the expansion of overseas production capacity in 25 years is expected to increase performance. The company has overseas production bases in Hungary, Germany, and Sweden, and the US base is also being planned. Among them, the Swedish and Hungarian bases are already producing profitably, and the German base is awaiting increased customer demand.

Profit forecast, valuation and rating: Due to price cuts in the structural parts industry, US policy disturbances, and uncertain growth rate of electrification demand in Europe and the US, the net profit forecast for 24-26 was lowered to 1.41/1.689/2.004 billion yuan (change -1%/-10%/-12%). The PE corresponding to the current stock price is 14/11/10 times.

Considering that the company is a leader in structural components and has excellent profitability, the overseas layout is expected to enter a harvest period and maintain a “buy” rating.

Risk warning: power and energy storage fall short of expectations; competition exacerbates the decline in profits; risk of changes in technology routes.