Incidents:
Hytera announced its 2024 semi-annual results. 24H1 achieved operating income of 2.738 billion yuan, an increase of 21.28% year on year; realized net profit of 0.162 billion yuan, an increase of 109.79% year on year; realized deducted non-net profit of 0.149 billion yuan, an increase of 135.27% year on year.
Rapid revenue growth and strong business resilience:
The company's overall revenue for the first half of the year achieved revenue of 2.738 billion yuan, YoY +21.28%. Among them, the main professional wireless communication business increased 16.77% year-on-year, showing business resilience under overall external pressure challenges.
Continuously improve the layout around the “2+3+1” product strategy, and seize emergency private network opportunities, maintain leading bid share, and further consolidate the market position. Looking back, the company continues to integrate public and professional services, and at the same time directs the business, deepens the application of AI for command and dispatch products, continues to expand the number of NLP models and data tags, and continuously upgrade the product layout to enable the company's future development.
Report quality continues to improve, and profitability is expected to continue to improve
The company achieved results in controlling expenses in the first half of the year. The fee rate for the period decreased by 4.11 percentage points year on year; at the same time, the quality of statements was improved, cash management was strengthened, and credit impairment losses were reduced by 65.03 million yuan year on year; interest-bearing liabilities were significantly reduced, and interest expenses decreased by 13.32 million yuan year on year. Furthermore, due to exchange rate fluctuations, the exchange loss in the first half of the year was 30.49 million yuan, an increase of 88.34 million yuan over the same period last year. Overall business quality and performance in the first half of the year showed a continuous positive trend.
Emergency communication benefits, new market opportunities for private networks
Emergency communication is a very important part of the emergency field. Previously, some cities in China had used the 370 MHz band for emergency narrowband wireless communication. As a domestic leader in the field of emergency communications, Hytera is expected to benefit from continued strengthening of emergency communications in the future. China's recent trillion-dollar treasury bond plan is investing in emergency and other fields, which may bring new market opportunities to the construction of emergency communications.
Looking ahead, private network leaders are consolidating basic business, and innovative business companies continue to consolidate their leading position in domestic private networks, launch H series products, be applied in various projects around the world and form large-scale orders, and the commercial industry circuit. At the same time:
① In terms of public specialty integration, the “White Paper on Public Professional Integration” and “Security White Paper” were published overseas, and cooperation with global industry customers and more than 20 operators to build more than 300 public sector integration platforms. Actively increase market share in transportation, energy, industry and commerce industries, and continue to promote digital marketing.
② In terms of NEV electronics, Shenzhen Hynengda Communications Co., Ltd., a wholly-owned subsidiary, signed the “Hytera NEV Electronics Project Strategic Cooperation Framework Agreement” with the Fuzhou Economic and Technological Development Zone Management Committee and Guomin (Fujian) Investment Co., Ltd. The company's new energy and automotive electronics products have been widely used in the world's leading power battery manufacturers, mainstream new energy vehicles and portable energy storage manufacturers, and this cooperation is expected to further promote business development. The company's NEV electronics business is mainly for some of the leading domestic NEV battery manufacturers and automakers. Among them, the main automaker customers include Geely, Guangzhou Automobile, Jinkang, and Xiaopeng.
Profit forecast and investment advice: We expect the company's net profit to be 0.4/0.57/0.75 billion yuan for 24-26, corresponding to the 24-26 valuation of 18/13/9 times, maintaining an “incremental” rating.
Risk warning: risk of adverse litigation decisions, geopolitical risk, risk of downstream demand falling short of expectations, risk of cost control falling short of expectations