Incidents. The company released its 2024 semi-annual report. The company's 24H1 achieved revenue of 1.53 billion yuan, -11.6% year-on-year, gross profit of 22.5%, year-on-year -2.1pct, net profit to mother 0.22 billion yuan, -11.6% year-on-year; the company's 24Q2 revenue was 0.75 billion yuan, -17.1% YoY, -3.6% month-on-month, gross profit of 21.8%, 4.9pct, YoY -1.4pct, net profit to mother 0.1 billion yuan, YoY -26.3% , -9.4% month-on-month.
The business performance is relatively steady, waiting for core customer sales to pick up. Revenue side: The company's 24Q2 revenue was 0.75 billion yuan, -17.1% year-on-month, and -3.6% month-on-month. We believe that the year-on-month decline in sales revenue was due to fluctuations in core customer sales volume. 24Q2's core customer Tesla China's wholesale sales volume was 0.206 million vehicles, -16.8% YoY and -6.8% month-on-month, causing some disturbance to the company's Q2 revenue; Profit side: The company's 24Q2 gross margin was 21.8%, year-on-year -4.9pct, month-on-month. billion yuan, -26.3% YoY, -9.4% month-on-month. We believe this is mainly due to the increase in the price of raw materials such as aluminum ingots and the increase in depreciation and amortization of assets; on the cost side: 24Q2's three-fee rate reached 3.6%, +1.3pct/month-on-month -0.2pct, of which the sales/management/financial expense ratios were 0.2%/3.7%/-0.3%, respectively, -0.1/+0.7/+0.7pct.
Leading new energy customers in the stamping parts segment continue to break through. The company is a leading domestic stamping parts segment. The front stringer 22H1 accounts for nearly 4% of the passenger car market in China, and the C-pillar internal mounting plate assembly has a share of nearly 12% in the new energy market in 21 years. The company is deeply involved in the field of automotive stamping parts and stamping dies, and the development of mold technology promotes cost reduction and efficiency in the stamping parts business. The company started with SAIC Motor and actively embraced new energy. It has now become a qualified supplier for well-known new energy vehicle manufacturers such as Tesla, Ideal Auto, NIO Auto, Zero Sports Auto, and BYD Auto, and has strong market competitiveness.
Ongoing orders for integrated die-casting with accelerated layout continued to break through. Tesla is leading the trend of integrated die-casting, greatly simplifying traditional manufacturing processes while reducing weight, increasing efficiency and reducing costs. More efficiency is more efficient than driving penetration acceleration, and domestic OEMs and suppliers quickly follow suit. On the basis of the existing stamping and welding business, the company accelerates the integrated die-casting business, and is simultaneously carrying out equipment purchases, factory construction, talent reserves and business development.
At the end of '23, the company's Bühler 9,200T die-casting unit was opened at the company's Yancheng plant. Subsequent, the company will also plan a number of oversized die-casting production lines at its Changzhou and Anhui plants to help further improve the company's business layout. In September '23, the company was selected by leading domestic NEV customers to supply integrated die-cast rear floor parts. The project is expected to begin mass production in 2025, and the total sales amount is estimated to be about 2.1-2.3 billion yuan during the life cycle.
Investment suggestions: The company is deeply involved in automotive stamping parts, binding new energy customers such as Tesla, Ideal Auto, and Zero Sports, and is expected to increase its market share with cost-effective advantages and quick response capabilities; the company actively expands new categories such as integrated die castings, and continues to break through in existing orders, opening up medium- to long-term growth space. The company is expected to generate revenue of 4.22/4.95/5.83 billion yuan in 2024-2026, net profit of 0.5/0.61/0.73 billion yuan, and EPS of 2.10/2.56/3.07 yuan, corresponding to the closing price of 21.14 yuan/share on August 22, 2024, PE 10/8/7 times, respectively, maintaining the “recommended” rating.
Risk warning: Vehicle sales fall short of expectations, increased competition in integrated die-casting, fluctuating raw material prices, etc.
