Event: On August 21, 2024, Otway published its 2024 semi-annual report. In 2024 H1, the company achieved operating income of 4.418 billion yuan, yoy +75.48%; realized net profit of 0.769 billion yuan, yoy +47.19%; new orders of 6.285 billion yuan (tax included), yoy +8.74%; as of 2024, with on-hand orders of 14.341 billion yuan (tax included), yoy +41.11%.

The advantages of the company's platform-based layout are prominent, and its market position is outstanding in various fields. 1) Photovoltaics: The core products are large-size ultra-high speed string welders (market share over 60%) and silicon wafer sorters have strong competitive advantages in their respective market segments. The competitive advantage of low oxygen monocrystalline furnaces is showing, and the market share of screen printing lines is gradually increasing; 2) Energy storage/lithium batteries:

The module/pack production line used in lithium battery energy storage produced by the company has received orders from CRRC Zhuzhou, Haibo Sichuang, Haishida (US), etc.; 3) Semiconductors: The company continued to receive batch orders for aluminum wire bonding machines and AOI testing equipment in the first half of the year. The number of orders increased significantly in the first half of the year, and the customer repurchase rate continued to rise.

R&D investment continues to be high, new products continue to be launched, and core competitiveness continues to improve. In 2024, H1 R&D invested 0.178 billion yuan, yoy +37.01%. The main reason was that the company increased R&D investment and introduced high-end R&D personnel. Through continuous high-intensity R&D investment, the company has achieved remarkable R&D results, forming a R&D system composed of four core support technologies and eight core application technologies. In 2024, H1 obtained 193 authorized intellectual property rights, including 100 invention patents, 74 utility model patents, and 11 software copyrights. As of June 30, 2024, the company has obtained a total of 1,808 authorized intellectual property rights, including 211 invention patents, 1,296 utility model patents, 117 software copyrights, and 3 design patents.

The ultra-high speed 0BB welding equipment completed industrial verification and obtained a large purchase order of over 10GW. Since the company launched TopCon 0BB welding equipment in early 2024, the company's product development team has been guided by market demand, thoroughly understands customer expectations for high-capacity large-size battery string welders to achieve the 0BB process, has the courage to break through traditional boundaries, and continues to iterate and optimize technology. In just half a year, ultra-high speed 0BB string welding equipment was successfully developed, and process verification was completed in many leading companies. This series of products is highly compatible with battery technology, welding processes and glue systems, bringing the industry a full range of 0BB serial welding solutions covering the stock and incremental markets.

The global layout has achieved remarkable results, and customer advantages are obvious. The company is actively developing a global layout, with more than 600 production bases for customers in more than 40 countries and regions around the world, dispatching engineers to provide customers with on-site equipment installation, commissioning and upgrading services, and establishing a strong engineering service team, making the company's customer advantages obvious, especially in the semiconductor field. In 2024 H1, it has obtained orders from IGBT and AOI customers in Wuxi Xinjie, Fuman Microelectronics, and Qipai Technology, etc., and established good cooperative relationships.

Investment advice: The company is expected to achieve revenue of 11.015/13.92/17.352 billion yuan in 2024-2026 and net profit of 1.847/2.227/2.699 billion yuan, an increase of 47.1%/20.6%/21.2% over the previous year. The current stock price corresponds to PE 6/5/4 times, respectively, maintaining the “recommended” rating.

Risk warning: New PV installations fell short of expectations, accounts receivable recovery fell short of expectations, and market demand declined.