Incident: On August 26, 2024, the company released its 2024 semi-annual report. 24H1 achieved operating income of 1.852 billion yuan, +79.13% year over year, net profit to mother of 78.7734 million yuan, +104.51% year over year, and realized net profit without return to mother of 76.6037 million yuan, +118.90% year over year. On a quarterly basis, 24Q2 achieved revenue of 1.057 billion yuan, +75.18% year on year, +33.00% month on month; realized net profit of 43.4828 million yuan, +72.33% year on year, +23.21% month on month; realized net profit without return to mother of 43.3927 million yuan, +75.92% year over year and +30.66% month on month.

Power distribution equipment: The basic bus plate is stable, and complete medium and low voltage equipment and transformers are being released. The company's power distribution equipment business achieved revenue of 0.731 billion yuan in the first half of the year, an increase of 38.44% over the previous year. 24H1 achieved revenue of 0.473 billion yuan, +5% over the same period, and revenue for medium- and low-voltage complete equipment increased significantly, from 0.045 billion yuan in 23H1 to 0.237 billion yuan in 24H1, +427% over the same period. It is expected that the company's medium- and low-voltage complete equipment and transformer business went overseas in the first half of the year, and it is expected that it will continue to provide strong support for the company's performance in the future . In terms of products, the company launched a new generation of intelligent power busbars in the first half of the year, further enriching the bus product matrix; medium and low voltage complete equipment products continued to enrich certification, and market competitiveness continued to improve; in the first half of the year, the company launched a full range of SCB18 energy-saving transformers that meet the country's latest energy saving requirements, developed high-capacity 5,500 kVA energy storage transformers and K coefficient isolation transformers, and the product category was continuously improved.

Energy storage: The product range is complete, and the overseas market continues to expand. The company's energy storage business achieved revenue of 0.336 billion yuan in the first half of the year, +1521% year-on-year, and the revenue scale is close to the level of the full year of last year. The company focuses on grid source side and user side energy storage. The 232 kWh industrial and commercial energy storage system, large capacity grid source measurement energy storage system, and EMS off-grid energy management system developed by the company in the first half of the year have been successfully delivered to meet the needs of different application scenarios from enterprises to power grids. The company's overseas footprint continued to expand. In the first half of the year, Westinghouse Electric of the United States upgraded from the original cooperation to jointly develop markets in Europe, South Africa, the Middle East, East Asia, Southeast Asia, etc., to provide solutions for all energy storage products. At the same time, the company also reached cooperation with Japanese companies such as Samsung and Fantasista. Overall, the company's overseas expansion process is accelerated, and the scale of overseas revenue is expected to continue to expand.

Photovoltaics: The revenue scale has increased significantly and is expected to benefit from iterations in battery technology. The company's new photovoltaic materials business achieved revenue of 0.73 billion yuan in the first half of the year, +59.57%. Among them, the share of SMBB welding belts continued to increase, from 50% + in 2023 to 60% + in 24H1. The company persists in R&D and innovation in welding belts. While the share of SMBB continues to increase, it has developed products such as ultra-fine diameter 0BB low temperature welding belts and solderless welding belts. We believe that with the increasing demand for cost reduction and efficiency of photovoltaic modules, the penetration rate of 0BB welding belts is expected to increase, further increasing the company's profits.

Investment advice: The company's revenue for 24-26 is estimated to be 4.32/6.134/7.785 billion yuan, and net profit to mother is 0.201/0.3/0.384 billion yuan, respectively, and the corresponding PE is 11x/8x/6x. Overall, the company's bus base is stable, medium and low voltage complete equipment, transformers and energy storage businesses have accelerated overseas, and products such as SMBB and 0BB welding belts have increased profits and maintained a “recommended” rating.

Risk warning: downstream demand falls short of expectations, capacity construction falls short of expectations, market competition intensifies, etc.