Incident: After the market on August 27, the company released its 2024 semi-annual report.
The interim report results are close to the forecast limit. Net profit due to 2024H1 increased 72% year on year. In the first half of 2024, the company achieved operating income of 0.57 billion yuan, up 29.31% year on year; net profit to mother was 0.14 billion yuan, up 71.75% year on year; net profit after deducting non-return to mother was 0.123 billion yuan, up 76.67% year on year. The rapid year-on-year increase in revenue was mainly due to the increase in overseas business revenue. The rapid year-on-year increase in profit was mainly due to the relatively stronger profitability of overseas businesses. Combined with the strengthening of lean management by companies, the reduction in expenses during the period was contributed. Looking at the subregion, the domestic market achieved revenue of 0.262 billion yuan (accounting for 45.9% of revenue), an increase of 10.42% over the previous year; the overseas market achieved revenue of 0.308 billion yuan (accounting for 54.1% of revenue), an increase of 51.28% over the previous year. Among them, Middle America's revenue was 0.208 billion yuan, up 41.08% year on year, accounting for 67.39% of overseas revenue.
2024Q2 achieved revenue of 0.33 billion yuan in a single quarter, up 24.09% year on year and 37.07% month on month; net profit to mother of 82.05 million yuan, up 23.13% year on year, up 40.54% month on month; net profit after deducting non-return to mother of 71.16 million yuan, up 22.37% year on year, up 36.87% month on month.
Profitability improved significantly in the first half of 2024. The gross margin of 24Q2 surged 5 pcts year on year. Looking at profitability, the gross profit margin of 2024H1 was 48.64%, up 2.15 pct year on year; the net profit margin was 24.63%, up 6.09 pct year on year. The significant increase in profitability is mainly due to the continuous expansion of overseas markets, leading to the optimization of the domestic and foreign market structure. The gross margin of the overseas market is relatively slightly higher than that of the domestic market. At the same time, the company strengthened lean management, and the cost rate dropped significantly during the period. 2024Q2's gross margin in a single quarter was about 50.15%, up 5.00 pct year on year, up 3.59 pct month on month; net profit margin was 24.89%, down 0.19 pct year on year, up 0.62 pct month on month.
On the cost side, the cost rate during 2024H1 was 23.35%, a year-on-year decrease of 5.16 pcts, mainly contributing to the decline in sales and R&D expenses. The 2024Q2 expense ratio for a single quarter was 24%, up 3.77pct year-on-year, mainly due to the increase in the financial expense ratio. Among them, sales, management, R&D, and finance cost ratios were about 10.69% and 9, respectively.
1%, 6.72%, -2.51%, year-on-year changes -1.88, +0.99, -1.89, 6.54pct. The significant year-on-year increase in financial expense ratios was mainly due to a year-on-year decrease in exchange earnings due to exchange rate fluctuations.
Leading wind power safety equipment leader, strong domestic wind power+overseas and multi-field expansion opens up room for growth 1) Overseas market expansion: ① Stock market: The North American and European markets all have large inventory transformation needs, and the company can enjoy the blue ocean market of overseas stock transformation; ② New markets: The company has more room for improvement compared to the domestic market. The transformation of overseas stock markets and an increase in market share in new markets are expected to bring room for incremental performance.
2) Expansion in multiple fields: The company's products are moving towards platform-based enterprises in multiple fields, such as industry and construction, emergency rescue, power grids, etc. At present, many new products have been launched in emerging fields. Among them, material conveyors and tower climbers are expected to become the company's next best products. ① Material conveyors: The application field is overseas household photovoltaic construction. Overseas labor costs are high. Equipment can help construction teams reduce labor costs and is expected to become standard for construction teams; ② Tower cranes:
Tower cranes are the main application scenario. Currently, there are tower cranes in stock that have not yet been equipped with lifting equipment. As labor dividends decrease and emphasis on life safety increases, tower cranes are expected to be equipped with additional lifting equipment.
3) Increased demand in the domestic wind power market: ① Demand for new installed wind power: From January to June 2024, the domestic public tender market added 66.1 GW of tenders, an increase of 48% over the previous year. According to CWEA forecasts, in 2024, the new lifting capacity of domestic wind power was about 75GW-85GW, a rapid increase over the previous year; ② Product/solution optimization and iteration brought about an increase in the value of single fan product configuration. 1. Product iteration: The company launched a high-load lift and rack and pinion lift, which is significantly higher in price compared to ordinary lifts; 2. Solution optimization: The company launched a “dual tower climbing” solution, that is, a lift+no crawler/climber, which increases the value of single fan configuration products; ③ Aftermarket demand: The wind power operation and maintenance market space is broad, which is expected to provide growth points for the company's medium- to long-term performance.
Profit forecast and valuation: Optimistic about the company's major development in the field of wind power and emerging applications, the 2024-2026 net profit is 0.323, 0.393, and 0.494 billion, up 56%, 22%, and 26% year-on-year, with CAGR = 24%. The corresponding PE is 14, 11, and 9 times, maintaining the “buy” rating.
Risk warning:
1) New domestic wind power installations fell short of expectations; 2) Expansion in overseas and other fields fell short of expectations.