Event: The company released the 2024H1 performance report. 2024H1, the company's revenue was 6.15 billion yuan, +17% year over year; net profit to mother was 0.4 billion yuan, +41% year over year. 2024Q2, the company's revenue was 3.18 billion yuan, +18% YoY, +7% month-on-month; net profit to mother was 0.21 billion yuan, +33% YoY, +10%.

The performance was in line with expectations, and the passenger car and digital energy business grew at a high year-on-year rate. By business, 2024H1, 1) Passenger vehicles: Domestic NEV sales reached 4.94 million units, +32% over the same period last year. The company's business revenue was 3.2 billion yuan, accounting for 52%, +37% year over year, gross profit margin of 17%, and +0.4 pct year over year. It is expected to benefit from scale advantages and increased overseas profitability; 2) Commercial vehicles and non-road: domestic commercial vehicle sales volume is 2.07 million units, +5% year over year. The company's business revenue was 2.3 billion yuan, accounting for 38%, or -4%; gross profit margin was 26%, +3pct year over year, which is expected to benefit from the increase in revenue share of high-quality customers; 3) Digital energy:

Revenue of 0.4 billion yuan, accounting for 7% and +41% year-on-year, is expected to benefit from the company's smooth market development.

Overseas operations are gradually improving, and profitability continues to increase. 2024H1, the company's gross sales margin was 21%, +0.7pct year on year, and the net sales profit margin was 7.2%, +1pct year on year. Among them, North American operators turned losses into profits year over year (revenue/net profit of 0.71/0.02 billion yuan, respectively), while European operators drastically reduced losses (revenue/net profit of 0.09/-0.01 billion yuan, respectively). 2024Q2, the company's gross sales margin was 21%, -0.6 pct month-on-month. It is expected to be affected by rising raw material prices and shipping costs. The net sales profit margin is 7.3%, +0.2pct month-on-month. It is expected to benefit from internal cost reduction and efficiency and increase in investment income. 1) Expense side: The total cost rate during 2024Q2 was 13%, -0.2pct month-on-month, mainly benefiting from financial expenses -0.6pct month-on-month; 2) Investment income: 2024Q2 was 0.04 billion yuan, mainly from the equity sale proceeds of Wuxi Yinlun.

Develop new business+global layout to open up future development space. In 2024, the company's revenue target is 13 billion yuan, aiming to reach 13.5 billion yuan, and the net profit margin to mother will reach more than 6%. The increase in performance comes from: 1) Global layout: 2024H1 has acquired more than 130 new projects, and it is predicted that the newly acquired projects will add about 4.1 billion yuan in annual revenue after delivery, with international orders accounting for 46%; 2) Cost reduction and efficiency: the company achieved comprehensive cost reduction through measures such as three packages of cost reduction while improving overseas operating efficiency; 3) Developing new businesses: 2024H1, the company's energy storage thermal management received projects such as Ariston, BYD, CRRC, and Sunshine Power; the low-altitude sector received large-scale cooling for aircraft heat management; the data center received large-scale cooling of aircraft heat management projects Orders from module and overall solution service providers.

Profit forecast and valuation: The company's net profit for 2024-2026 is expected to be 0.85/1.11/1.41 billion yuan, respectively, and the corresponding PE is 15/11/9 times, respectively, maintaining a “buy” rating.

Risk warning: Downstream sales fall short of expectations, industry competition intensifies, and customer development falls short of expectations.