Incident: On August 22, Ruiming Technology released its semi-annual report. The company achieved total revenue of 1.152 billion yuan in half a year, an increase of 48.83% over the previous year, and net profit to mother of 0.124 billion yuan, an increase of 104.90% over the previous year.

Performance doubled year-on-year, and cost control was excellent. In 2Q24, the company achieved revenue of 0.65 billion yuan, a year-on-year increase of 59.27%, and realized net profit to mother of 0.071 billion yuan, an increase of 94.39% over the previous year. The company's 2Q24 gross profit margin and net margin were 38.58% and 11.10%, respectively, -4.91 pct and +2.29 pct year-on-year, respectively. In terms of expense ratios, the company's sales expense ratio, management expense ratio, and R&D expense ratio for the second quarter were 8.64%, 8.52%, and 11.56%, respectively, year-on-year, -3.40pct, -3.02pct, and -1.88pct, respectively. The scale effect of the increase in revenue was obvious, bringing a significant increase in net interest rates to the company.

Overseas business brings high growth. The company's overseas and domestic revenue in the first half of the year was 0.601 billion yuan and 0.551 billion yuan respectively, accounting for 52.18% and 47.82% of the company's revenue, up 44.72% and 53.61%, respectively. In terms of gross margin, the gross margin of the company's overseas business in the first half of the year was 57.45%, which is basically the same as last year; the domestic gross margin for the first half of the year was 22.51%, down 4.83 pct from the domestic gross margin for the full year of last year. We believe that the growth of overseas business is the main driving force for the company's profit growth, and overseas business is expected to bring a new growth curve to the company.

Investment advice: The company is deeply involved in intelligent commercial vehicles, and the global demand for intelligent commercial vehicles is expected to bring about a new growth curve. We expect the company to achieve operating income of 2.161, 2.755, and 3.495 billion yuan in 2024-2026, and net profit to mother of 0.252, 0.318, and 0.405 billion yuan. The corresponding PE is 21x, 16x, and 13x, maintaining the “gain” rating.

Risk warning: risk of exchange rate fluctuations, risk of trade friction, risk of increased market competition, risk of technological upgrading, risk of global economic downturn, etc.