The performance was in line with expectations. The company's revenue for the first half of the year was 6.152 billion yuan, up 16.9% year on year; net profit to mother was 0.403 billion yuan, up 41.1% year on year; net profit after deducting non-return to mother was 0.364 billion yuan, up 40.8% year on year. Revenue for the second quarter was 3.182 billion yuan, up 17.5% year on year, up 7.2% month on month; net profit to mother was 0.211 billion yuan, up 33.3% year on year, up 10.4% month on month; net profit after deducting non-return to mother was 0.185 billion yuan, up 24.8% year on year, up 3.3% month on month. The company overcame adverse factors such as rising shipping costs and raw materials, accelerated the improvement of the performance evaluation system to improve operating efficiency, promote the improvement of overseas business profitability, and achieved relatively rapid growth on the profit side in the second quarter.

Gross margin remained flat year over year in the second quarter, and cash flow increased sharply. The gross profit margin for the first half of the year was 21.2%, up 0.7 percentage points from the previous year; the gross profit margin for the second quarter was 20.9%, which was basically the same, down 0.6 percentage points from the previous month; the cost ratio for the first half of the year was 13.1%, up 0.2 percentage points year on year. Among them, the sales expense ratio increased 0.5 percentage points year on year, mainly due to the increase of 45.37 million yuan in the cost of the three product packages. Net cash flow from operating activities in the first half of the year was 0.354 billion yuan, up 114.2% year on year, mainly due to the year-on-year increase in cash received from sales products.

Continuously receiving orders from international customers, the digital and energy third-growth curve business achieved breakthroughs. In the first half of the year, the company received more than 130 new projects, adding about 4.143 billion yuan in annual sales revenue during the post-delivery life cycle, with commercial vehicles and off-road orders accounting for 22.7%, passenger cars accounting for 63.2%, and digital energy accounting for 14.1%. Looking at the subregion, international orders accounted for 46%, domestic orders accounted for 54%, and order acquisition from international customers continued to accelerate. Passenger car business revenue in the first half of the year was 3.182 billion yuan, up 36.4% year on year. It received several new international customer projects such as cooling modules, air conditioning boxes and IGBT cold plates for North American customers, European parts manufacturer Chiller, battery liquid cooling plates, condensers and front-end modules from world-renowned automobile groups, and Mercedes-Benz water air coolers. The digital and energy business revenue in the first half of the year was 0.435 billion yuan, up 23.5% year on year. The company made every effort to promote the digital and energy third curve business development, breaking through many strategic customers and major customers. The energy storage sector received new customer projects such as Ariston, BYD, CRRC, and Sunshine Power, and the low-altitude field obtained a well-known customer low-altitude aircraft thermal management project; the data center field achieved a breakthrough in liquid cooling system orders to supply customers with BTB computing power center liquid cooling systems; at the same time, it received orders for ultra-large cooling modules for data center backup power sources from internationally renowned machinery and equipment companies. It has also gradually established cooperative relationships with many well-known domestic and foreign technology companies. The company added an AI digital intelligence product division to the three major divisions, focusing on resources to develop artificial intelligence fourth-curve businesses such as chip heat transfer, humanoid robots, and core components to cultivate future sustainable growth points.

The profitability of overseas operators has been greatly improved, and the organizational structure has been optimized to consolidate the foundation of internationalization. The company comprehensively promoted the excellent operation of overseas operators, and the profitability of overseas factories improved significantly. In the first half of the year, the North American sector achieved revenue of 0.706 billion yuan, an increase of 50.7% over the previous year; it achieved a profit of 17.85 million yuan, turning a loss into a profit over the previous year. The European sector achieved revenue of 85.58 million yuan, a year-on-year increase of 90.7%; it achieved a loss of 7.41 million yuan, a significant year-on-year reduction. According to the company's announcement, the company established a global procurement headquarters and trading company to strengthen the company's construction of a global supply chain and international trade platform in terms of top-level organizational structure design, and to lay a solid foundation for the company's overseas business expansion and continued improvement in profitability.

EPS is predicted to be 1.05, 1.42, and 1.77 yuan respectively in 2024-2026, which is 17 times the average valuation of the company's PE in 24, and the target price is 17.85 yuan, maintaining the purchase rating.

Risk warning

The amount of support for thermal management systems for new energy vehicles fell short of expectations, the amount of support for industrial and civil businesses fell short of expectations, and profits from overseas factories fell short of expectations.