Incidents:

The company released its 2024 semi-annual report. During the reporting period, the company achieved operating income of 6.355 billion yuan, an increase of 4.41% year on year; realized net profit of 1.225 billion yuan, an increase of 184.81% year on year; net profit after deducting non-return to mother was 0.22 billion yuan, an increase of 15.23% year on year.

Benefiting from the continuous explosion of the AI computing power industry chain, the PCB business took the lead in growth. During the reporting period, the company's PCB equipment business achieved revenue of 1.564 billion yuan, an increase of 102.89% over the previous year. In the first half of 2024, as competition in the general multilayer board market intensified, the requirements of PCB manufacturers for equipment efficiency and automation continued to increase. At the same time, with the rapid development of the AI computing power industry chain, the demand for high-end PCB processing increased dramatically. By launching efficient products such as a CCD six-axis independent mechanical drilling machine with integrated drilling and measurement, a four-beam CO2 laser drilling machine, and a special mechanical drilling machine for high speed packaging substrates, Dazu Laser has met the customer's requirements for advanced PCB processing technology. The company's layout in the Southeast Asian market has also achieved remarkable results. It has reached cooperation with many well-known domestic and foreign companies to seize market opportunities brought about by the transfer of the PCB industry. Related orders have increased significantly, which has promoted the continuous growth of overseas business. The semi-annual report revealed that during the reporting period, the company completed the disposal of the holding subsidiary DazuST, and confirmed that the investment income was 0.89 billion yuan, which was an unrecurring profit and loss. After deducting this impact, the company's main business was running smoothly, and operating performance increased slightly compared to the same period last year. The company further strengthens its market position by continuously improving product performance and process levels.

The accelerated development of AI is expected to drive the consumer electronics industry into an innovation cycle. Since 2024, major brand manufacturers, such as Samsung and Xiaomi, have launched products such as PCs and mobile phones with AI functions. As a trend vane in the consumer electronics industry, Apple (Apple) has also officially released the AI product Apple Intelligence, which will be installed on subsequent versions of mobile phones. As a leading enterprise in the consumer electronics industry, the company is expected to benefit from this AI innovation cycle. On the overseas side, demand for equipment in India, Vietnam and other places has increased significantly. The company is actively expanding overseas markets, keeping up with customers, and by efficiently setting up overseas R&D and sales teams, the company strives to seize market opportunities brought about by diversification of the supply chain and promote the development of international business.

Investment advice:

We expect the company's revenue from 2024 to 2026 to be 14.903 billion yuan, 17.557 billion yuan, and 20.231 billion yuan respectively, and net profit to mother will be 1.739 billion yuan, 1.208 billion yuan, and 1.922 billion yuan, respectively. After deducting Dazusite's investment income of 0.89 billion yuan in 2024, net profit to mother will be 0.849 billion yuan, giving 28 times PE for 24 years. Corresponding to the six-month target price of 22.6 yuan, it was given a “buy-A” investment rating for the first time.

Risk warning:

Downstream demand recovery fell short of expectations; international trade frictions intensified; market competition intensified.