Event: Company releases 2024 semi-annual report

2024H1 revenue increased slightly year over year, and net profit after deducting non-net profit increased 6.74% year over year. 2024H1 achieved operating income of 1.752 billion yuan, a year-on-year increase of 1.01%, realized net profit of 0.075 billion yuan, a year-on-year decrease of 9.64%, and realized net profit of 0.071 billion yuan after deduction, an increase of 6.74% over the previous year. By business, finished bearings and rings achieved sales revenue of 0.934 billion yuan, which is basically the same as the previous year. Auto parts achieved revenue of 0.196 billion yuan, an increase of 14.20% over the previous year. Thermal management system components achieved revenue of 0.545 billion yuan, an increase of 7.20% over the previous year.

Demand for finished bearings is stable, and robot bearings have completed the development of a full range of products. The company focuses on the new field of new energy vehicles and industrial bearings. The company has now successfully developed a full range of NEV bearing products and supplied to domestic and foreign engine customers. The company is actively expanding the production capacity of ball ring needle roller bearings to meet the growth in overseas markets of Toyota vehicles and the market demand for domestic new energy vehicles, and successfully supplying ball ring roller bearings to a new model of a new mainstream car builder in China. Furthermore, the rapid rise of the robot industry has expanded new fields of application for the bearing industry. Robot-related bearings include: flexible thin-walled bearings, four-point contact ball bearings, angular contact ball bearings and needle roller bearings; high-load, high-precision tapered roller bearings, cross roller bearings, etc. The company has successfully developed a full range of robot bearing products to support robot reducer manufacturers such as Nangao Gear, Neustar, Zhongda, Jiya Precision, and Laifu Harmonic.

The screw layout has been continuously improved, and small-batch product sales have been achieved. The company's screw products mainly include trapezoidal screws (sliding screws), ball screw pairs, and planetary roller screws. During the reporting period, the company has completed the design and continuous improvement of relevant screw product components and components. Mainstream product technology routes are gradually being optimized and defined, and small-batch product sales have also been achieved. With the advantages of the entire industry chain and advanced technical reserves, the company has completed rapid product iteration, promptly responded to the new needs of the current market, and further increased R&D and production investment and downstream market development. The robot-related industry chain is expected to grow rapidly in the future, providing the company with room for sustainable development.

Profit forecasting and investment advice. Due to the company's downstream demand falling short of expectations, we lowered the company's profit forecast. It is estimated that the company's revenue for 2024-2026 will be 3.379/4.204/4.847 billion yuan, net profit to mother will be 0.165/0.205/0.248 billion yuan, respectively. The PE corresponding to the current market value is 27.9/22.4/18.5X, respectively. Looking at the long term, the company is expected to enter the robot growth circuit. At the same time, the NEV and wind power roller business supports the company's long-term growth and maintains a “buy” rating.

Risk warning: NEV sales fall short of the expected risk; wind power installation falls short of the expected risk; the level of localization of the robot industry chain falls short of the expected risk.