In the first half of 2024, the company achieved revenue, net profit, and net profit of 6.166, 0.887, and 0.841 billion yuan respectively, +16.27%, +26.64%, and +23.48%, respectively. Among them, revenue achieved in the second quarter, net profit, and deducted non-net profit of 3.509, 0.524, and 0.5 billion yuan, respectively, with year-on-year increases of 12.05%, 8.66%, and 0.26%, respectively.

The steady growth in performance was in line with expectations. In the first half of the year, the company achieved revenue of 6.17 billion, an increase of 16.3% over the previous year. The company strengthened cost control and increased gross margin by 2.7 pcts to 31.75% (including switches, coils, reactive power compensation, and smart device products increased 3.8, 0.7, 2.7, and 1.2 pcts year on year, respectively). At the end of the period, the company's construction project was 0.31 billion, and it continued to promote supporting expansion of production capacity. The company was one of the few companies that significantly expanded production capacity and products during the downturn in the domestic power grid equipment industry after 2016.

Overseas business is growing rapidly, and contributions are gradually increasing. In the first half of the year, the company's overseas business achieved revenue of 1.51 billion, a sharp increase of 40% over the previous year, accounting for 24.6% of revenue, a gross profit margin of 33.8%, and an increase of 1.5 pct. The company has invested in overseas business for more than ten years, formed corresponding product systems and solutions, and gradually built a more complete sales and service system. The company's products and services are competitive. On the basis of the many existing product categories, the advantages of its solutions will gradually become apparent, and there is great potential and potential for the future.

The company's domestic business performance in the second half of the year is likely to catch up. In the first half of the year, the company's domestic business revenue was 4.65 billion, up 10.2% year on year, and gross margin increased 2.8 pcts year on year. Q2 Revenue growth has slowed. It is probably mainly due to a slowdown in the delivery and bidding process of some of the State Grid projects. Combined with the latest batch of tenders from the State Grid, we analyzed that delivery may accelerate in the second half of the year. Therefore, it is expected that the company's domestic business performance in the second half of the year may catch up.

Continuing to promote product addition, the business structure and management system can support the company's growth. Over the past ten years, the company has continuously added products through endogenous cultivation and epitaxial integration, developing from an early single business to a three-dimensional product system covering switches, GIS, coil equipment, protection automation, and power electronics, and began strategically cultivating overseas business very early. The company has gone through the industry cycle in this process. In the past 5 years, the company entered a new round of business expansion, began cultivating new business categories such as transformers, automotive electronics, energy storage, etc., and enriched product lines such as flexible and medium/low voltage. In terms of management systems, after the sales and procurement platform system, the company began to strengthen capacity building in China and Taiwan, and also paid more attention to incentives at the middle level. Overall, the current business structure and management system can support the company's further growth.

Investment advice: The company's current products are competitive, the future development direction is clear, the management ability is strong and strategic strength. It is a long-distance runner; with the company's current business structure and management system, it can support the company to grow in size and maintain a “highly recommended” rating.

Risk warning: grid investment fluctuations, new business risks, overseas business risks.