24H1 overseas business exceeded expectations, and adjusted net profit increased significantly. (1) 24H1 performance: revenue 0.861 billion/yoy +39.78%, net profit to mother 0.023 billion/yoy -82.07%, adjusted net profit 0.072 billion/yoy +95.78%, by business: 1) Invisible correction solutions: revenue 0.6 billion/yoy +8.47%, mainly due to an increase in cases reached in the Chinese market; 2) Sales products: revenue 0.252 billion/yoy +363.06%, Mainly due to strong growth in international business; 3) Other services: revenue of 0.009 billion/yoy +4.92%, steady growth. (2) Profitability: 24H1 gross profit margin 62.43% /yoy+3.09pct, sales expense ratio 39.83% /+6.72pcts, mainly due to business expansion to increase marketing expenses, management expense ratio 18.33% /-1.25pcts, basically flat, R&D cost ratio 8.69% /yoy-5.28pct, thanks to improved R&D efficiency and R&D project promotion.

Domestic: High quality growth, stable revenue, and strong competitive advantage. 24H1's revenue was 0.633 billion/yoy +10.14%, the number of cases reached 95,300 cases/ +10.81%, the adjusted net profit was 0.112 billion, and the corresponding adjusted net interest rate was 17.7%. Against the backdrop of domestic economic pressure, there is a lot of pressure on high-end optional consumption, and we think the domestic market is slightly lower than expected. The company continues to expand sales channels at various levels in various cities to meet the diverse needs of dentists and clinics. MOOELI, a digital dental remote solution, helped over 1,500 clinics organize free dental clinics, dental cleaning, etc., covering more than 0.15 million patients. The company insists on technological upgrading. In June, the new iOrtho 11.0 system was released at the “Root Search and Traceability, Scientific Diagnosis and Treatment” technical seminar in Beijing, which empowers orthodontics with AI and fully assists doctors in the entire pre, during and after diagnosis and treatment cycle.

Overseas: Global organization+localized operation, deepening the market in many regions. Thanks to localization advantages, high-quality medical design solutions and clinical medical support, 24H1's overseas revenue reached 0.228 billion, and the number of cases increased to 37.7% of 24H1. We believe that the pace of overseas market development exceeded expectations; 24H1's adjusted net profit was -0.114 billion. We estimate that there was a large amount of sales expenses in the early stages of market development, and 24H1's high sales rate verifies the investment trend. By region: (1) Europe: The first European Time Angel Academic Forum was held in Spain in March, inviting dozens of orthodontists to participate, attracting more than 200 orthodontists. During the forum, doctors proposed iOrtho, a self-developed digital platform of Time Angels, to shorten treatment time and reduce the number of restarts; (2) North America: Participating in the 124th American Association of Orthodontists in May, where aesthetic orthodontic opinion leaders shared product differences features for the first time through Time Angel patient cases; (3) Asia Pacific: Further coverage of markets such as Malaysia and Thailand through local business teams and regional dealer networks; ( 4) Brazil: Empowering Aditek's medical design, intelligent manufacturing, etc., to support the growth of its own brand Self and prepare for the launch of the Times Angel series products. The two brands meet the diverse needs of the market.

Investment advice: Times Angels are actively exploring and sinking overseas markets. Overseas markets are still in the early stages of exploration. Short-term profits are disrupted. In the medium to long term, they are optimistic about rising profits from overseas businesses, showing higher profit elasticity. Based on the interim report performance, revenue expectations were slightly raised. The 2024-2026 revenue is expected to be 1.83 billion/2.22 billion/2.7 billion, and net profit to mother is 0.065 billion/0.124 billion/0.188 billion. Future profit elasticity is high, and the “buy” rating is maintained.

Risk warning: macroeconomic fluctuations, increased market competition, policy risks, overseas market development falls short of expectations.