Incident: The company released its 2024 mid-year report. During the reporting period, it achieved revenue of 2.771 billion yuan, +22.93% year over year; net profit to mother 0.216 billion yuan, +1.84% year over year; deducted non-net profit of 0.197 billion yuan, +2.83% year over year. Among them, Q2 achieved revenue of 1.404 billion yuan, net profit attributable to mother of 0.102 billion yuan, and deducted non-net profit of 0.095 billion yuan. The gross profit margin for the second quarter was 21.93%, +1.8pct year over year, and +2.62pct month-on-month. The increase in gross margin was mainly due to iterative product upgrades and scale effects.
High R&D investment helped lead technology, and the tripartite supplier ranked first in the market share of automotive power supplies for four consecutive years. In the first half of 2024, the company's R&D expenses were 0.179 billion yuan, +62.43% year-on-year, and the R&D expenditure rate was 6.45%, +1.57pct year-on-year. Some workshops at the company's Huajin factory in Wuhu have achieved intelligent “black light factories”, significantly reducing labor costs. At the same time, the company plans to build a new factory in Thailand with a planned production capacity of 0.3 million units/year. The company maintained industry leadership through continuous R&D and innovation. In the first half of 2024, the domestic market share of the company's automotive power supplies was 19.4%, +0.6pct compared to the previous year. The market share of three-party suppliers was 32.4%, ranking first for four consecutive years.
Continued to be selected by customers at home and abroad, and delivery of fourth-generation products began. In the first half of 2024, the company's vehicle power revenue was 2.324 billion yuan, +15.20% year-on-year; electric drive system revenue was 0.285 billion yuan, +299.99% year-on-year. The company continues to grow in targeted projects with leading new car builders and well-known domestic automakers, and SOPs for several domestic car companies' designated projects are gradually being scaled up, including a new leading car builder, Geely Automobile, Changan Automobile, Chery Automobile, etc. The company's new product platform steadily increased with the volume of designated models, and mass production and delivery of fourth-generation automotive power integrated products began. Based on the “demonstration effect” and R&D advantages of close cooperation with Stellantis Group, the company is actively expanding more overseas customers; at the level of flying cars, the company's products have also been designated by Xiaopeng Huitian.
Investment advice: We maintain the company's profit forecast for 2024-2026. We expect the company's net profit to be 0.64/0.81/1.02 billion yuan in 2024-2026, corresponding EPS of 1.52/1.93/2.42, respectively.
We believe that the company is leading in R&D and has obvious technical advantages. In the future, overseas business is expected to take the lead and maintain a “buy” rating.
Risk warning: downstream demand falls short of expectations, industry competition intensifies, overseas policy risks.