Introduction to this report:

The company released its 2024 semi-annual report, with a significant year-on-year increase in performance. With the gradual release of the company's on-hand orders and the continued development of new products, the company's performance is expected to continue to grow at a high rate.

Key points of investment:

The target price was lowered to 32.67 yuan to maintain the “gain” rating. Considering the increase in the scale effect brought about by the continuous increase in the company's order volume, the 2024-2026 EPS forecast was raised to 1.21 (+0.1) /1.59 (+0.11) /2.04 (+0.21) yuan, +36%/+28% year-on-year, considering that the company's product structure was different from comparable companies, the company was given a higher average valuation than comparable companies in the industry, and the target price was lowered to 32.67 yuan (originally 39.48 yuan) to maintain the “gain” rating.

Q2 Revenue and performance increased year over year, in line with performance forecasts. The company achieved revenue of 4.19 billion yuan in H1 in 2024, +46.2% year-on-year, and realized net profit to mother of 0.29 billion yuan, or +57.9% year-on-year.

H1's performance was close to the median forecast, and the year-on-year increase was mainly due to continued project releases and increased scale effects. In 2024, the company achieved revenue of 2.2 billion yuan, +41.9% YoY, +10.6% month-on-month, and realized net profit of 0.15 billion yuan to mother, +38.8% YoY and +1.7%.

Q2 Gross margin decreased and increased with circular growth, showing the benefits of cost control. The company's Q2 gross profit margin was 21.9%, -0.2pct year over year, and +0.4pct month-on-month. The Q2 sales/management/R&D/finance cost rates were 3.6%/2.0%/8.1%/0.3%, respectively, +0.5pct/-0.5pct, compared to +0.5pct/-0.5pct. The overall cost rate for the Q2 period declined year-on-year, mainly due to scale effects and improvements in company management.

Order development has progressed significantly, and breakthroughs in products and technology have continued. In 2024, H1's automotive electronics business order development progressed significantly. Major products such as cockpit domain control, HUD, and screen displays continued to receive many targeted projects. Order amounts increased dramatically, and joint ventures and international car company customer projects increased. The company's precision die-casting business also saw a significant increase in orders for component projects such as three-electric systems and intelligent driving systems. In 2024, H1 continued to increase investment in R&D, achieved rapid iteration of automotive electronics products and technology, and made new progress in precision die-casting business technology.

Risk warning: the risk that the penetration rate of new products falls short of expectations, the risk of new customer expansion falling short of expectations, and the risk of rising raw material prices.