Key points of investment

Incident: The company released its 2024 mid-year report. The company's 2024H1 revenue was 3.46 billion yuan, up 7.9%, the same increase of 3%, the gross profit margin was 31.4%, the same increase of 0.7pct, the net profit margin was 17.3%, and the year-on-year net profit was -0.8pct; of these, 2024Q2 revenue was 1.91 billion yuan, -11%/22.8% year-on-month, and the gross profit margin was 32.5%. 4.5/2.5pct, net profit margin 19.9% month-on-month, 2/5.9pct month-on-month.

Smart meters are developing steadily, and overseas orders are sufficient. The company's 2024H1 electricity meter segment had revenue of 1.15 billion yuan, of which overseas revenue was 0.429 billion yuan, accounting for nearly 37%. The company accelerated its global business layout. In the domestic market, the 2024H1 two networks won a total bid of 0.644 billion, and Guonan Network increased by 11%/93%, respectively, and won the top five bids in the industry. Overseas markets deepened, and 2024H1's gross margin increased to 32.9%: ① Continuing to strengthen cooperation with Wrangier to expand market share in Western Europe and Asia Pacific; ② Based in Central and Eastern Europe through its wholly-owned subsidiary EGM, 2024H1 won more than 0.8 billion yuan in total bids and actively cultivated emerging markets such as Romania, Bulgaria, and Hungary; ③ The Middle East market strengthened cooperation with ECC, and signed a new 0.21 billion yuan electricity meter order in 2024. ④ The Asian region closely followed central state-owned enterprises going overseas, breaking through the Indonesian market, and gradually expanding Southeast Asian markets such as Malaysia, Thailand, and Vietnam.

The power plant business is growing steadily, and the reserve project is 4GW+. 2024H1's power plant sales and power generation revenue was approximately 0.948 billion yuan and 0.421 billion yuan, with gross margins of 16.4% and 66.8%, respectively. 2024H1 added more than 200MW of grid-connected scale and 500MW of new construction scale. As of 2024H1, the construction project exceeded 1.2 GW. By the end of 2024H1, the company had accumulated reserves of more than 4 GW of photovoltaic projects; the scale of its own power plants was about 1.14 GW, including 156 MW of wind power projects, and 14.65 GW of contracted operation and maintenance capacity increased by 50%. In 2024, the company expects to develop 1.5 GW and connect 800-900 MW to the grid; the power plant will grow steadily. The company's 6GW Topcon operates steadily, and 2024H1 produces 1GW of its own supply; 2024H2 is expected to produce 2.5-3GW for export.

Energy storage orders are being implemented at an accelerated pace, and overseas breakthroughs are gradually being made. The company's 2024H1 energy storage business revenue was 0.74 billion yuan, with a gross margin of about 20%, an increase of 4 pcts over 2023. 2024H1 has shipped nearly 1.5 GWh of energy storage, with a total delivery of nearly 3.5 GWh. The joint venture between the company and Saudi ECC to build an energy storage pack plant began in the first half of the year, and is expected to be put into operation in 2024Q4. Overseas products were certified one after another in 2024Q2, and it is expected that 2024H2 is expected to deliver 100 MWh. We expect the share of overseas revenue from the company's energy storage business to further increase to 25% in 2025, and overseas energy storage will gradually break through.

Profit forecast and investment rating: We basically maintained the 2024-2026 net profit of 1.18/1.36/1.55 billion yuan (previous value was 1.18/1.36/1.55 billion yuan), +15%/+14% year over year. Considering the company's high growth in new energy and energy storage, we maintained a “buy” rating.

Risk warning: Policies fall short of expectations, increased competition, etc.