Incident: The company released its 2024 interim report. In the first half of 2024, the company achieved operating income of 4.25 billion yuan, a year-on-year increase of 16.8%: realized net profit of 0.52 billion yuan, an increase of 1.2% over the previous year; realized net profit of 0.47 billion yuan after deduction, an increase of 11.4% over the previous year. Looking at the second quarter alone, the company achieved revenue of 2.51 billion yuan, an increase of 14.4% over the previous year:

Achieved net profit of 0.37 billion yuan, a year-on-year increase of -11.3%: realized net profit of 0.35 billion yuan after deduction, a year-on-year increase of -0.8%. In the first half of 2024, the company achieved net profit of 0.52 billion yuan +49.80% after excluding GDR exchange gains and losses. The company's revenue maintained a high growth rate, and after excluding the impact of GDR exchange, the growth rate of net profit to mother exceeded expectations.

(23H1GDR exchange revenue is about 0.16 billion yuan; 24H1GDR exchange loss is about 2.842 million yuan). The year-on-year increase, the basic market business grew steadily, and the instrument revenue growth rate was outstanding:

Looking at end products, the company's control system (control system and control system+instrument) achieved a total revenue of 17.25 in the first half of the year. The country actively promoted control system equipment updates, and products related to industrial automation and intelligent manufacturing were booming. Revenue of 1.11 billion yuan, up 3.23% year on year: instruments achieved revenue of 0.353 billion yuan, an increase of 72.18% year on year.

100 million yuan, up 17.65% year on year: Industrial software (industrial software and control system+software+others) has achieved steady growth in revenue advantage industries and actively cultivated emerging business opportunities:

Looking at the revenue side by industry, in the first half of the year, the revenue of the petrochemical industry increased by 26.95%, the revenue of the chemical industry increased by 117.32%, and the revenue of the pharmaceutical and food industry by 29.23% in the first half of the year.

Industry revenue increased 26.03%: Emerging industries such as oil and gas, pharmaceuticals, food and beverage industries maintained a relatively rapid growth trend, and the oil and gas business sector. The company's robotics business developed from a high starting point, successfully receiving orders from CNOOC, Huayi Group, Saudi Aramco, etc. In addition, the company actively developed orders from high-end users in new industries such as robots, wind hydrogen production, smart laboratories, smart coal mines, smart parks, etc., and increased its strategic investment in the field of “humanoid robots” and took a stake in the Zhejiang Humanoid Robot Innovation Center with the largest shareholder.

Cost control capabilities have improved, and high-quality development is expected to continue:

In the first half of the year, the company's overall gross margin was 33.23%, up 0.75pct year on year: management expenses ratio was 4.48%, down 1.12 percentage points year on year; sales expenses ratio was 8.11%, down 1.20 percentage points year on year. It benefited from 49.80% of the company's revenue, which was significantly higher than the revenue side growth rate.

Business management capabilities continue to be deepened, and management efficiency continues to improve. After excluding GDR exchange gains and losses, net profit returned to mother increased year-on-year, and international business broke through rapidly. Overseas revenue may become a new highlight of 2024 performance:

The year-on-year increase was 63.82%. In the first half of the year, the company's overseas business revenue with Saudi Aramco, Germany's BASF, and Petronas Indonesia, the company's overseas business revenue was 0.343 billion yuan, an increase of 188.22% over the previous year: new overseas contracts were signed with 0.5 billion yuan, and cooperation with high-end international customers such as the company Pertamina, Thailand's Indorama, and Petronas, Malaysia's petroleum company, deepened. Looking ahead to the whole year, the company is expected to continue to break through high-end overseas customers and maintain rapid overseas business growth.

Maintain an “Overweight” rating. The company is a leader in intelligent manufacturing solutions for the domestic process industry, and its 2024 performance is expected to maintain high growth; overseas markets open up room for growth, and the “digital economy+industry” shapes the long-term development logic. We estimated 26.84/21.13/16.42 times to maintain the “gain” rating.

The company's net profit for 2024-2026 was 1.32/1.677/2.157 billion yuan, respectively. Corresponding PE is a risk warning: high-end products fall short of expectations, overseas market expansion falls short of expectations, risk of falling product gross margin, risk of untimely updates to information used in research reports, etc.