Introduction to this report:
The company released its 2024 semi-annual report, and Q2 results were temporarily under pressure. As the automobile terminal market enters a peak season in the second half of the year, integrated die-casting projects with high bicycle value are gradually being scaled up, and the company's performance is expected to gradually improve.
Key points of investment:
The target price was lowered to 30.36 yuan to maintain the “gain” rating. The company released its 2024 semi-annual report. Affected by the decline in production and sales volume of some downstream customers, the company's Q2 performance was temporarily under pressure. The 2024-2026 EPS was adjusted to 2.20 (-0.45) /2.53 (-0.66) /2.87 (-1.12) yuan. The production and sales volume of some customers may fluctuate due to increased competition in the downstream vehicle market. The company was given 12 times PE in 2025 (slightly lower than the average value of comparable companies), and the target price was lowered to 30.36 yuan (originally 33.68 yuan) to maintain an increase in holdings rating.
The pressure on the company's Q2 performance is related to the impact of fluctuations in production and sales of downstream customers. In 2024, H1 achieved revenue of 1.53 billion yuan, -11.6% year-on-year, net profit of 0.22 billion yuan, or -12.0% year-on-year, after deducting non-net profit of 0.21 billion yuan, or -9.6% year-on-year. Among them, Q2 2024 achieved revenue of 0.75 billion yuan, -17.1% YoY, -3.6% month-on-month, net profit to mother 0.1 billion yuan, -26.3% YoY, -9.4% month-on-month, after deducting 0.1 billion yuan of non-net profit, -23.5% YoY and -6.1% YoY.
Tesla is one of the company's important customers. In 2024, Tesla (Shanghai) wholesale sales volume was -16.8% year-on-year and -6.8% month-on-month. Fluctuations in production and sales volume of vehicle customers had a certain impact on the company's revenue and net profit.
The company's various expense rates are relatively stable. In 2024, the company's sales/management/R&D expenses ratio was 0.1%/3.7%/3.1%, respectively, -0.1 pct/+0.7 pct/ -1.1 pct year over year, and -0.3 pct/basically flat/+0.9 pct. The overall cost ratio of the company is relatively stable, showing strong cost control capabilities and excellent operating efficiency.
Automobile terminals entering peak season in the second half of the year will bring improvements, and the die-casting business continues to advance. As passenger car sales enter the peak season in the second half of the year, downstream vehicle sales will increase, and the company's performance is also expected to improve. In terms of integrated die-casting business, the company has set up 2 6100T die-casting production lines in Lu'an, Anhui to support customers such as NIO. A large-scale 9200T die-casting production line in Yancheng has also been put into use. In addition, an integrated die-casting production line in Jintan, Changzhou is also under construction. In September 2023, the company's integrated die-cast floor products were designated by a new energy customer. Mass production is expected to begin in 2025. The bicycle value of die-cast products is high, which is expected to make a positive contribution to performance.
Risk warning: Downstream customer production and sales fluctuate, and sales of products such as integrated die casting fall short of expectations
