Incident: The company disclosed its 2024 semi-annual report, and the company's performance increased significantly year-on-year. The company's revenue for the first half of 2024 was 2.353 billion yuan, +33.50% year on year; net profit to mother was 0.19 billion yuan, +431.53% year over year; net profit after deducting non-return to mother was 0.178 billion yuan, which was corrected year on year, and the company's operating income and net profit both increased significantly.

The P&S segment's revenue is growing rapidly, and the company still has plenty of room to expand in the global market. Currently, the company's P&S technology platform products are mainly supplied to middle and high-end customers in the automotive industry at home and abroad. During the reporting period, auto parts sales accounted for 75.72% of the company's P&S main business revenue, reaching 0.841 billion yuan, up 28.42% year on year. Household appliance parts revenue accounted for 20.27% of the company's P&S main business revenue, reaching 0.225 billion yuan, up 23.97% year on year. Due to the difference in cost performance between the Chinese and foreign manufacturing industries and the reduction or slowing down of investment by foreign friends and merchants, the company still has a lot of room for import substitution and global market expansion of powder metallurgy products in the automotive industry.

The SMC segment's revenue reached a record high in Q2 2024, and breakthroughs were achieved in chip inductors and soft magnetic materials for server power supplies. From January to June 2024, the company's SMC main business revenue rebounded steadily from the first quarter and reached a record high of 0.276 billion yuan in a single quarter in the second quarter. Currently, the company's SMC technology platform products are mainly used in the new energy industry. During the reporting period, sales revenue in the photovoltaic sector accounted for 35.94% of the company's SMC main business revenue, and NEV sector and SMC technology platform sales accounted for 16.46% of the company's SMC main business revenue. At the same time, the company adapted to the development of computing power. In the first half of the year, SMC achieved sales revenue of 52.29 million yuan in chip inductors and soft magnetic materials for server power supplies.

The MIM sector has grown significantly, and folding screen modules continue to advance. Since the third quarter of 2023, the consumer electronics industry has rebounded. The company's main MIM business revenue increased 101.11% year-on-year in the first half of 2024. Following the pace of new product launches by major customers, it is already equipped with 5 folding machine module production lines. The volume of folding screen phones will bring continuous growth in demand for MIM. According to CINNO Research data, the global folding screen phone market will sell about 18 million units in 2023, an increase of 27% over the previous year. Counterpoint predicts that in 2025, the global folding screen phone market will reach 55 million units, and by 2027, folding screen phone shipments will reach 0.1 billion units.

Profit forecast: Since the growth rate of the company's P&S sector exceeded expectations, we raised the company's profit forecast. With the gradual introduction of new products in the company's three major sectors, we expect the company's revenue for 2024-2026 to be 5.154/6.471/7.737 billion yuan, respectively. Net profit attributable to mother was 0.434/0.571/0.673 billion yuan, corresponding to PE20.21/15.37/13.04 times, maintaining the “buy” rating.

Risk warning: introduction of the company's new products