Incident: The company released its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 9.01 billion yuan, an increase of 3.3% year on year; net profit to mother was 0.8 billion yuan, an increase of 22.0% year on year. Revenue for the second quarter was 4.7 billion yuan, up 4.1% year on year and 9.3% month on month. Net profit to mother was 0.41 billion yuan, up 4.5% year on year and 6.0% month on month. Performance improved steadily, and profitability continued to improve.

The share of electric fork sales increased, helping to increase the company's profit margin. The company's comprehensive gross margin for the first half of 2024 was 21.6%, an increase of 1.8 percentage points over the previous year, mainly due to the increase in the share of electric forklift sales. The company's expenses rate for the first half of the year was 11.7%, an increase of 1.6 percentage points over the previous year, mainly due to the company's increased overseas market promotion efforts and sales expenses; sales, management, R&D, and financial expenses were +1.0, +0.2, +0.6, and -0.3 percentage points, respectively. The net interest rate for the first half of the year was 9.6%, an increase of 1.1 percentage points over the previous year, mainly due to the increase in government subsidies in the current period.

The electrification rate of the industry has increased significantly, and the company is actively deploying new energy forklift products. The electrification rate of domestic forklifts increased significantly in the first half of the year. Sales of Class I, II, and Class III forklifts increased 19.0%/22.6% year-on-year respectively. The overall electrification rate of the industry in the first half of the year reached 70.8%, up 2.9 percentage points from the end of 2023, and the electrification rate of large trucks reached 32.0%, up 0.8 percentage points from the end of 2023. In this context, the company continues to increase investment in R&D, and has successively released all H4 lithium-electric forklifts and a new generation of smart i series products. Currently, the largest domestic G2 series 55-ton electric forklift has entered the prototype trial stage. In the first half of the year, the company's electric forklift sales increased 37.7% year-on-year, accounting for 62.7% of sales, which is higher than the industry's growth rate.

Continue to expand overseas markets and build a global brand. In the first half of the year, the company further accelerated its overseas market layout and business expansion, achieved the official opening of Heli Oceania, injecting new momentum into Heli's global strategy and achieving overseas revenue of 3.486 billion yuan, an increase of 20.52% over the previous year. In the first half of the year, it is planned to invest in the establishment of Heli's European headquarters and Heli's overseas (Germany) R&D center to promote the implementation of the internationalization strategy in an orderly manner, further enhance international market competitiveness, enhance international operation capabilities, and expand international market share. Currently, the company's international marketing service system consists of seven major overseas centers in Europe, Southeast Asia, North America, the Middle East, Eurasia, Oceania and South America and more than 300 agencies, which can provide users with a full range of services, and its products sell well in more than 150 countries and regions around the world.

Profit forecasting and investment advice. The company's net profit from 2024-2026 is expected to be 1.53, 1.8, and 2.07 billion yuan respectively. The compound net profit growth rate for the next three years is 17.4%, maintaining a “buy” rating.

Risk warning: risk of macroeconomic fluctuations, risk of overseas market expansion falling short of expectations, risk of exchange rate fluctuations.