Event: The company released its 24-year report

1) Mid-year report: Achieved operating income of 7.529 billion yuan, up 15.73% year on year; realized net profit of 0.709 billion yuan, up 28.49% year on year; net profit after deducting 0.687 billion yuan, up 32.05% year on year; net cash flow from operating activities was 1.492 billion yuan, up 91.19% year on year.

2) Q2 '24: Achieved operating income of 4.468 billion yuan, up 23.2% year on year, 45.96% month on month, net profit to mother of 0.431 billion yuan, up 26.35% year on year and 55.4% month on month. Net profit after deducting back to mother was 0.415 billion yuan, up 28.02% year on year and 52.52% month on month.

Four-wheelers: Channel inventory optimization continues, and the company's leading position remains stable. Under the influence of the overall decline in the industry, the company's active retail and inventory removal was compounded, and the company's overall four-wheeler business recovered slightly. According to the company's semi-annual report, the company sold a total of 0.0814 million four-wheelers in the first half of '24, achieving sales revenue of 3.532 billion yuan, a slight decrease of 1.55% over the previous year. However, the export value of the company's all-terrain vehicles accounts for 71.75% of the domestic export value of similar products, making it a leading position in the industry. Currently, the company continues to hold the number one market share position in the European market, and the US dealer network continues to expand.

Benefiting from the continued steady growth in foreign market demand, the global all-terrain vehicle market is expected to still have a lot of room for development. The company mentioned in the interim report that according to Allied Market's forecast, the global all-terrain vehicle market will increase at a compound annual growth rate of 7.3% from 2022 to 2031, and is expected to reach 18.6 billion US dollars by 2031. Considering the competitiveness of the company's products and the growing market size of the industry, it is expected that the company's four-wheeler revenue will continue to increase in the future and maintain the company's leading position.

Two-wheelers: Strong growth resilience, > No. 1 in sales volume above 250CC. According to the company's semi-annual report, the company achieved sales of 0.1539 million two-wheelers in the first half of the year, achieving sales revenue of 3.248 billion yuan, an increase of 41.95% over the previous year. Among them, > 250CC motorcycle sales rank first in the industry, accounting for 21.09% of the total industry volume. In terms of domestic sales, the company achieved domestic sales revenue of 1.446 billion yuan for two-wheelers, an increase of 38.25% over the previous year, and achieved domestic sales of 0.068 million units. Overseas, the company achieved export sales of 0.0858 million units and revenue of 1.802 billion yuan, an increase of 45.07% over the previous year. In terms of new products, the company's 500SRVOOM was officially launched. The company welcomed the first four-cylinder member of the SR family. The 675SR has also been unveiled. It will become the first three-cylinder product in the company's SR series. New products such as 250CLC, 450CLC single-seat, and 450MT will also be launched one after another, and the product spectrum has been further improved. At present, the company has a cumulative overseas dealer network of more than 1,500 and more than 600 domestic channels. A strong dealer network with the launch of new products is expected to continue to inject growth momentum into the company.

Electric two wheels: Revenue increased by more than 300%, channel construction progressed rapidly, creating the third growth curve. In half a year, the company successfully launched new AE2 and AE4 series products, upgraded AE8 S+ and CITY products, covering a full range of product lines from high-end electric motorcycles to high-end electric motors, and gradually improved the product spectrum. According to data disclosed in the company's interim report, the company sold a total of 0.0204 million electric vehicles in the first half of the year, achieving sales revenue of 0.116 billion yuan, an increase of 300.44% over the previous year. The company's channel construction is progressing rapidly. The company's domestic channels have increased by 81.03% and overseas channels have grown by 181.25%. Currently, it has covered more than 30 countries and regions including Europe, Asia and South America. As new products continue to be launched and the density of channel outlets continues to increase, electric vehicles are gradually becoming a new growth point for the company.

The company has clear barriers, a stable position in overseas markets, and maintains a “highly recommended” investment rating. We expect the company's 24-26 revenue to be 14.427 billion yuan, 17.314 billion yuan, 20.437 billion yuan, and net profit to mother of 1.331 billion yuan, 1.672 billion yuan, and 1.967 billion yuan, corresponding to the current market capitalization PE of 14.5 times, 11.6 times, and 9.8 times, maintaining a “highly recommended” investment rating.

Risk warning: risk of exchange rate fluctuations, weak overseas demand, economic recession, etc.