Thanks to mass production of new products and new customer projects, Keboda's revenue grew at a high year-on-year rate. The company achieved revenue of 2.742 billion yuan in 2024H1, a year-on-year increase of 39.9%, and achieved net profit of 0.372 billion yuan, a year-on-year increase of 34.9%; in 2024Q2, the company achieved revenue of 1.325 billion yuan, a year-on-year increase of 26.5%, a year-on-month decrease of 6.5%, and a net profit of 0.153 billion yuan, a year-on-year increase of 6.1% and a decrease of 30.4% month-on-month.

By product, the company's 2024Q2 lighting control system revenue was 0.65 billion yuan, up 17% year on year, down 12% month on month, motor control system revenue was 0.21 billion yuan, up 23% year on year, down 10% month on month, vehicle electrical and electronics revenue was 0.2 billion yuan, up 26% year on year, down 4% month on month, and energy management system revenue was 0.17 billion yuan, up 13% month on month. Looking at customers, customer categories have expanded, and the share of the public has declined. 2024H1, the new car builder accounts for more than 15% of overall sales.

Expense rates have declined, and multiple factors have dragged down the company's profitability performance. 2024Q2's four-rate rate was 14.8%, -1.7 pct year-on-year, and -1.1 pct month-on-month. 2024Q2's gross profit margin was 26.12%, -4.46pct year on year, -5.85pct month-on-month, net profit margin 12.36%, -2.09pct yoy, -3.93pct month-on-month. The month-on-month decline in the company's profitability in the second quarter of 2024 is expected to be related to factors such as a decrease in customer compensation revenue confirmed in the current period and a reduction in current government subsidies.

Focus on high-value products, continue to increase the value of bicycles, and continue to build a domain controller platform-based enterprise.

In 2024, the company will further optimize its product structure and develop or focus on higher-value products such as domain controllers, efuses, regional controllers, and central gateways. Considering participating in the company Keboda Intelligent Technology's intelligent driving domain controller business, the maximum bicycle value is expected to reach more than 0.01 million yuan.

Accelerate the global layout, and have plenty of orders in hand. In the first half of 2024, the company's main products received 43 new designated projects, including Volkswagen Global, BMW, Mercedes-Benz, Audi, American Cummins, Anhui Volkswagen, FAW Audi, FAW Hongqi, New North American Car Building Force, and Xiaopeng. The estimated product life cycle sales volume is about 75 million. By the end of June 2024, the company had a total of 136 research projects, and the estimated product life cycle sales volume exceeded 0.28 billion, including 21 global platform projects such as Volkswagen, BMW, Audi, Mercedes-Benz, the new North American car builder, Cummins of the United States, and Deutz of Germany. The company received the next generation LED headlight controller project from the Volkswagen Group. In addition, in the first half of the year, the company Efuse, chassis suspension controllers DCC, and ASC successfully entered the public support system; eLSV (electronic steering column controller) received BMW's global platform designation; DCDC (DC power converter) received designation for Porsche and Audi projects; and intelligent thermal management actuators were designated for Audi and BMW global projects.

Investment advice: slightly lower the profit forecast and maintain a better rating than the market. Considering fluctuations in production schedules for different projects, we slightly lowered our profit forecast. We expect revenue of 62.1/77.1/93.0 for 24/25/26 (6.32/7.84/9.47 billion for 24/25/26) and profit of 0.85/1.11/1.32 billion (previously 0.9/1.13/1.34 billion for 24/25/26), maintaining an superior market rating.

Risk warning: Vehicle sales fall short of expectations, risk of rising raw materials, etc.