Event: The company announces 2024 semi-annual results. In the first half of '24, the company achieved operating income of 10.284 billion yuan, a year-on-year increase of 19.99%; achieved net profit of 1.507 billion yuan, a year-on-year increase of 30.56%; and realized net profit deducted from non-mother of 1.159 billion yuan, an increase of 24.77% year-on-year.
Benefiting from the recovery in downstream demand, the company's performance continued to increase. In the first half of 2024, the company's performance continued to grow rapidly. 1) Rail transit equipment business revenue of 6.139 billion yuan, +30.87% year-on-year. Among them, rail transit electrical equipment revenue was 4.947 billion yuan, +27.33%; rail construction machinery revenue was 0.557 billion yuan, +15.57% year over year; communication signal system revenue was 0.416 billion yuan, +131.47% year over year; and other revenue was 0.219 billion yuan, +52.23% year over year. 2) The emerging equipment business grew steadily, with revenue of 4.094 billion yuan, +9.21% year-on-year.
Among them, the power semiconductor devices, new energy electric drives, and offshore equipment businesses grew, with revenue of 1.747 billion yuan (+26.63%), 0.903 billion yuan (+8.23%), and 0.405 billion yuan (+18.61%), respectively. Affected by factors such as slowing demand growth and price pressure in some downstream industries, revenue in the sensor and industrial conversion sector declined, with revenue of 0.136 billion yuan (-47.01%) and 0.903 billion yuan respectively (-3.58%).
Net interest rates continued to rise, and R&D investment remained high. 24H1's gross profit margin was 27.84%; net profit margin was 15.57%, +1.7pct. Q2 The company's gross profit margin in a single quarter was 23.99%; net profit margin was 16.10%, +2.59pct year over year, and +1.38pct month-on-month. The company's three expense ratios remained stable. The sales/management/finance expense ratio in the first half of the year was 1.98%/4.21%/-0.76%, -0.38pct/-0.29pct/+0.72pct year-on-year. R&D investment remained high. In the first half of the year, R&D expenses were 0.945 billion yuan, and the R&D cost ratio was 9.19%.
The railway industry continues to prosper, and the rail transit equipment business is expected to maintain high growth. Since this year, China's railway passenger traffic has been rising steadily, repeatedly reaching record highs. China Railway Group's EMU tenders have exceeded the level of last year, and the number of EMU advanced repair tenders continues to exceed expectations. The company's market share remains stable, new orders for urban rail traction systems continue to lead the industry, and the development of serial new energy locomotives continues to advance, and some models of models have been loaded. Demand for new EMU purchases and maintenance resonates upward. The central government is promoting large-scale equipment upgrades and rail transfers. Demand for locomotives and trucks is expected to be released, and new energy locomotives to replace old internal combustion engines are expected to drive a sharp rise in the volume and price of locomotives. The boom in the rail transit industry will provide sufficient momentum for the growth of the company's rail transit equipment business.
The emerging equipment business has broken through rapidly and is optimistic about long-term growth. The company made rapid breakthroughs in various businesses in the emerging equipment sector, leading the market share, with 24H1 passenger vehicle power modules ranked in the top two in the industry, with a market share of 13.4%; photovoltaic inverters won the bid of 8.35 GW, ranking in the top five in the domestic domestic market; electric drive systems for new energy vehicles ranked in the top nine domestic market; the electronic control installed capacity of new energy vehicles steadily ranked first in the domestic market; sensor components ranked first in the domestic market share in the field of new energy vehicles, wind power and photovoltaics. Looking ahead to the second half of the year, the Yixing Phase 3 power semiconductor project is expected to be put into operation, and it is expected to contribute to increased performance after production capacity climbs; tenders for high-voltage power grid devices are expected to begin, and the project will continue to be delivered; and the new energy market continues to expand. With the accelerated expansion of products and domestic and overseas markets, the company's emerging equipment business is expected to continue to grow steadily.
Investment recommendation: The company is expected to achieve net profit of 3.829 billion yuan, 4.442 billion yuan, and 5.058 billion yuan respectively in 2024-2026, corresponding EPS of 2.71, 3.15, and 3.58 yuan, and corresponding PE of 21 times, 18 times, and 16 times, maintaining the recommended rating.
Risk warning: risk of investment in fixed assets falling short of expectations, risk of new product expansion falling short of expectations, risk of increased market competition, etc.