Incident: The company released its 2024H1 financial report. During the reporting period, it achieved revenue of 3.037 billion yuan, +21.59% year on year, realized net profit of 0.105 billion yuan, +62.79% year on year, minus 0.074 billion yuan in non-net profit, +37.31% year on year, gross profit margin of 12.87%, and +0.18 pct year on year.

Performance was in line with expectations, and profit continued year-on-year growth: 2024Q2 achieved revenue of 1.768 billion yuan, +25.29% /month-on-month +39.38%, net profit to mother of 0.076 billion yuan, +32.18% /month-on-month +159.41%, net non-net profit 0.065 billion yuan, +24.97% YoY/+658.29% month-on-month, gross profit margin 13.99%, +0.55pct/month-on-month +2.68pct. The company's revenue continued to increase year over year, and profitability continued to improve. We judge that new customer projects brought about the growth of the speaker business+the beginning of mass production of automotive acoustics contributed to the performance. Looking to the future, under the wave of AI, speakers will usher in new opportunities for development as entry-level terminal products, and automotive acoustics is also expected to continue to unleash performance.

AI speakers lead the card position, and car acoustics are successfully mass-produced: 1) AI speakers: The “ChatMini” AI speaker, jointly developed by the company and VIFA, was launched on the market in August 2023, and cooperation with domestic and foreign manufacturers equipped with large models of smart speakers continues. Research and development of various product types has been carried out, such as those with screens and emotional support functions. The company's leading card position in AI speakers is expected to help seize the opportunity in the AI speaker wave. 2) Automotive acoustics: The company has mass-produced some third-generation automotive platform projects for new power leader P customers, has prepared mass production preparations for NEV customers, and is actively promoting cooperation with many new energy/traditional car companies. The future automotive business is expected to grow rapidly, forming an important performance contribution.

Investment advice: The company's performance is growing rapidly, and AI speakers+car acoustics are expected to become an important driving force for growth.

We expect the company's 2024-2026 net profit to be 0.319/0.438/0.522 billion yuan, EPS 0.56/0.77/0.92 yuan, corresponding PE 20.03/14.59/12.24 times, maintaining the “gain” rating.

Risk warning: Risk of new product industrialization falling short of expectations; risk of automobile demand falling short of expectations; risk of falling consumer electronics demand; risk of exchange rate risk; risk of trade friction; risk of raw material supply and price fluctuations.