Matters:
On the evening of August 22, the company released its 2024 semi-annual report. 24H1 achieved operating income of 4.569 billion yuan, a year-on-year increase of 26.97%, and realized net profit to mother of 0.198 billion yuan, an increase of 2.21% over the previous year.
Ping An's point of view:
The industry's leading position is highlighted, contributing to steady revenue growth. 24H1 achieved revenue of 4.569 billion yuan, +26.97% year-on-year, of which the controller business achieved revenue of 4.497 billion yuan, or +30.99% year-on-year. In terms of net profit, 24H1 achieved net profit of 0.198 billion yuan, +2.21% over the same period. Since the subsidiary Chengchang Technology was affected by industry fluctuations, which had a certain impact on the company's net profit at the consolidated statement level, the net profit of the company's controller business achieved good growth. 24H1's controller business net profit reached 0.209 billion yuan, +28.33% over the same period last year. In terms of profit margins, 24H1's gross margin and net margin reached 17.47% and 3.87%, respectively. Looking at the single quarter, 24Q2 achieved revenue of 2.587 billion yuan, +30.52% month-on-month, and realized net profit of 0.101 billion yuan, -9.37% year-on-year, and +5.01% month-on-month. The gross margin and net margin for the single quarter were 17.94% and 3.57%, respectively.
The basic controller board continues to be consolidated, and the four major business segments are progressing steadily. 1) Home appliance controller business:
The company continues to take advantage of its competitive advantage in the field of home appliance controllers, and continues to expand new markets and rich product lines, especially in the domestic market. 24H1's domestic home appliance business revenue doubled, driving the increase in home appliance controller business revenue. 24H1's home appliance controller business achieved revenue of 2.917 billion yuan, +35.3% over the same period; 2) Power tool controller business: The company has entered the supply system of many leading customers at home and abroad, such as TTI, Bosch, HILTI, Baide, Quanfeng, and Daye. Market share increased steadily. In the first half of the year, the company received multiple platform-level projects from major core customers, driving revenue growth. 24H1's power tool controller business achieved revenue of 0.494 billion yuan, +11.83% over the same period; 3) Automotive electronics business: The automotive electronics business has become an important driving force for the company's performance growth. Currently, the company has successfully broken through many domestic and foreign Tier 1 and automaker customers, successfully obtained supply qualifications and obtained multiple ODM project orders. The products include integrated thermal management modules, compressor control, High-pressure oil pump control, HOD, etc. are suitable for various models including GAC Haobo GT, Hongqi, Changan, and Wenjie M7. Thanks to this, 24H1 automotive electronics business sales increased dramatically, achieving revenue of 0.395 billion yuan, an increase of 73.73% over the previous year. 4) Intelligent product business: The company's intelligent products mainly rely on AI, the Internet of Things and big data as the underlying layer to further develop and produce related controllers and smart hardware. Currently, the company's smart mattresses, smart school bags and smart sports platforms have achieved large-scale production and delivery, and formed business cooperation with high-quality customers in the Henglin Home Furnishing and Gujia Home Furnishing industries. 24H1's intelligent product business segment achieved revenue of 0.562 billion yuan, +34.76% over the same period last year.
Investment advice: Based on the company's performance report and judgment on industry trends, we lowered the company's performance forecast. The company's 2024-2026 EPS is expected to be 0.56 yuan (previous value 0.82 yuan), 0.74 yuan (previous value 1.08 yuan), and 0.92 yuan (new), corresponding to the closing price of PE on August 23, 2024, is 16.4/12.4/10 times, respectively. However, considering the company's competitive advantage in the controller field, it is expected that performance recovery will be achieved and the company's “recommended” rating will be maintained while downstream demand gradually picks up.
Risk warning: (1) The tight supply of upstream raw materials adversely affects the company's performance. If the tight supply of upstream raw materials is not alleviated, the pressure on the company's cost side will continue to increase; (2) the development of the automotive electronics business falls short of expectations. If the development and delivery of the company's automotive electronics business products falls short of expectations, it will affect the company's operating performance; (3) downstream consumer demand falls short of expectations. If downstream consumer demand continues to weaken, it may have a certain impact on the company's operating performance.