1H24 results are in line with our expectations

The company announced 1H24 results: 1H24 achieved revenue of 6.355 billion yuan, +4.41% year-on-year; net profit to mother of 1.225 billion yuan, corresponding to profit of 1.16 yuan per share, +184.8% year-on-year. Among them, 2Q24 achieved revenue of 3.7 billion yuan, +1.04% year-on-year, and net profit to mother of 0.236 billion yuan, or -18% year-on-year. Thanks to the recovery in equipment business demand in the downstream information industry and other reasons, the company's 1H24 performance was in line with our expectations.

Development trends

The information industry equipment business inventory removal cycle has ended, and downstream demand has recovered. The company's information industry equipment business revenue was 2.351 billion yuan, an increase of 43.54% over the previous year. 1) Consumer electronics: 1H24's revenue was 0.787 billion yuan, a year-on-year decrease of 9.25%. We recommend focusing on the innovation needs of major customers, the customization needs of Android customers, and the expansion of production in overseas supply chains; 2) PCB equipment: 1H24 revenue was 1.564 billion yuan, an increase of 102.89% over the previous year, mainly due to increased competition in the general multi-layer board market leading to increased requirements for equipment efficiency and automation, and the increase in demand for high-end PCB processing brought about by the development of the AI computing power industry chain.

Demand for new energy equipment has declined markedly, and overseas business continues to grow. 1H24's new energy equipment business revenue was 0.696 billion yuan, a year-on-year decrease of 39.65%, mainly due to the slowdown in 1H24 domestic power battery and photovoltaic manufacturers expanding production. In terms of photovoltaic equipment, due to the boom in the industry, downstream customer capital expenses have been reduced, affecting the company's related equipment orders. In order to seize global development opportunities, the company continues to promote cooperation with mainstream customers in the lithium battery industry and actively participate in the process of major customers going overseas.

Semiconductor business orders increased markedly, and general industrial laser processing equipment profits improved. 1) Semiconductor equipment: 1H24's revenue was 0.752 billion yuan, down 10.32% year on year, mainly due to the continued recovery in the semiconductor and pan-semiconductor industry, and orders increased significantly; 2) General industrial laser processing equipment: 1H24's revenue was 2.557 billion yuan, up 4.03% year on year. Among them, revenue from high-power laser cutting equipment was 1.254 billion yuan, up 5.15% year on year; revenue from high-power laser welding equipment was 0.12 billion yuan, down 21.20% year on year. We judge that the world's first 150KW ultra-high power cutting machine launched by the company will continue to expand its influence in the high-end sector.

Profit forecasting and valuation

Due to the company's sale of Dazustar's shares, we raised the company's 2024 profit forecast by 74.3% to 1.739 billion yuan, keeping the 2025 profit forecast basically unchanged. The current stock price corresponds to a price-earnings ratio of 12.3 times/18.8 times for 2024/25. Considering the company's leading position and the recovery in the PCB industry's boom, we maintain our outperforming industry rating while maintaining a target price of 23.00 yuan, which corresponds to a price-earnings ratio of 13.9 times/21.3 times in 2024/25, with 13.6% upside compared to the current stock price.

risks

Downstream demand falls short of expectations; the expansion of the new energy sector falls short of expectations; PCB prosperity falls short of expectations.