Core views

The company achieved 42% year-on-year revenue growth in the first half of 2024, driven by high shipments of power assembly products. The installed volume of power assemblies in the first half of the year was 0.3775 million units, and segment revenue achieved rapid growth of +132% year-on-year. In the first half of 2024, the company's power supply assembly sales ranked among the top 3 domestic Tier 1 suppliers. However, due to the fact that the share of motor controller revenue for high-margin products fell from 30% in the first quarter of '24 to 17% in the second quarter, the overall gross margin of the company's overall business fell 1.6 pct to 13.3% in the second quarter.

occurrences

In the first half of 2024, the company achieved revenue/net profit after deduction of 1.02/0.035/0.012 billion yuan, +42%/+218%/+130% of the same period, turning a loss into a profit; of these, 24Q2 achieved revenue/net profit to mother/net profit of 0.55/0.026/0.006 billion yuan, +19%/+222%/+121% year-on-year, which is basically consistent with the rapid performance report.

Brief review

Power supply assembly: The increase in supporting models led to a double increase in revenue 1) Volume: The company's revenue from power assembly products reached 0.501 billion yuan in the first half of '24, +132% over the same period. The main reason was a further increase in supporting models, with an installed capacity of 37.70.05 million units. At the unit price level, power assembly products in the first half of the year were about 1,327 yuan/unit, which was basically the same as the previous year

2) Gross profit margin: 12.06% in the first half of '24, -8.5pct year on year, mainly due to price decline due to fierce market competition.

3) Market share: According to statistics from the industrial media NE Era, the company's power supply assembly sales rank among the top 3 domestic Tier 1 suppliers.

Electric drive assembly: Higher commodity prices combined with fierce competition led to low gross margin 1) Volume: The company's electric drive assembly products achieved revenue of 0.24 billion yuan in the first half of '24, +12%. We expect shipments of about 0.03 million units, with an average product price of 8010 yuan/unit.

2) Gross profit margin: The gross margin of electric drive assemblies in 24 years was 1.7%. Although the year-on-year increase was 7.2 pct, mainly due to high-priced raw material inventories and a rise in new production lines during the same period in 23, gross margin was still low, related to commodity price increases and fierce market competition. Drive assembly products account for relatively high raw material costs, mainly including permanent magnets, silicon steel sheets, copper, aluminum, etc. Among them, copper and aluminum prices were greatly affected by price fluctuations in domestic and foreign commodities. The rise in commodity prices since this year has eroded the gross profit space for assembly products to a certain extent.

Motor controllers: Higher commodity prices combined with fierce competition led to lower gross margins1) Volume: The company's motor controller products achieved revenue of 0.235 billion yuan in the first half of '24, down 5% year-on-year. We expect shipments to be around 0.247 million units, with a unit price of about 951 yuan/unit.

2) Gross profit margin: The gross margin of motor controller products in the first half of the year was about 26.95%. The gross margin of this product is high. The share of motor controller product revenue is expected to drop from 30% to 17% in the first quarter of '24, leading to a decline in the company's overall gross margin in the second quarter.

Other income: Government subsidies and VAT input tax credits increased the first half of the year's performance. After deducting non-net interest rates, the company's other income for the first half of the year totaled $0.043 billion, mainly government subsidies and value-added tax credits, which accounted for 135.2% of the total profit, which had a clear effect on the company's performance in the first half of the year. Judging from the parent scale, the company's net interest rates for the first and second quarters were 1.8% and 4.8% respectively; judging from the non-net deduction scale, the deducted non-net interest rates for the first and second quarters were 1.5% and 1.4% respectively. After excluding non-current accounts, the company's net interest rate did not fluctuate significantly.

Investment advice: Net profit due to mother is expected to be 0.066, 0.092, 0.119 billion yuan in 2024, 2025, and 2026, corresponding to 49, 35, and 27 times PE, giving a “gain” rating.