Key points of investment

The company 24H1 achieved operating income of 0.868 billion yuan, +23.46% year over year; net profit to mother 0.045 billion yuan, +39.02% year over year; net profit after deducting non-return to mother 0.044 billion yuan, +51.30% year over year. 24Q2 achieved revenue of 0.507 billion yuan in a single quarter, +22.48% year over year; net profit to mother 0.037 billion yuan, +54.41% year over year; net profit after deducting non-return to mother 0.037 billion yuan, +71.09% year over year.

Traditional fields+emerging tracks+overseas markets have made concerted efforts to build 24H1's outstanding revenue performance in the first half of 2024, while continuing to vigorously expand new tracks and actively explore overseas markets, achieving impressive growth in all business areas. Among them, revenue from the refrigeration industry and the power and electrical industry increased by more than 20% and 30%, respectively, continuing to consolidate the company's leading position in traditional fields of advantage; at the same time, revenue from new tracks such as electronics and new energy vehicles increased by nearly 55% and 30%, respectively, and revenue from new tracks continued to rise; in addition, the company continued to improve its product capabilities around overseas customer needs and accelerate the expansion of markets in Asia Pacific, North America, Europe, the Middle East, etc., and 24H1 overseas sales increased nearly 50% year on year.

Traditional fields+emerging tracks+overseas markets joined forces to jointly promote the company 24H1 to achieve revenue of 0.868 billion yuan, +23.46% over the same period last year.

Prices of bulk raw materials have risen, compounded by deepening measures to improve quality and efficiency. 24H1's profitability increased significantly. 24H1 achieved a gross profit margin of 15.04%, +1.31pct year on year; 24Q2 achieved a gross profit margin of 17.62%, +2.44pct year on year. With the rise in the price of silver, the bulk raw material in the first half of the year, the company's profit level was significantly restored; at the same time, the company continued to deepen a series of initiatives such as lean management, process optimization, equipment transformation and management changes, gradually improving product scale efficiency and the company's operating efficiency to promote the improvement of overall profitability. 24H1 achieved net profit of 0.045 billion yuan to mother, +39.02% year over year; 24Q2 achieved net profit of 0.037 billion yuan per quarter, +54.41% year over year.

Profit forecasting and valuation

The overall revenue for 2024-2026 is estimated to be 1.825/2.271/2.741 billion yuan, respectively, with corresponding growth rates of 28.97%/24.44%/20.71%, and net profit to mother of 0.066/0.093/0.128 billion yuan, respectively. The corresponding growth rates are 58.20%/40.87%/38.06%, respectively, and the corresponding EPS is 0.74/1.04/1.43 yuan, respectively. Maintain a “buy” rating.

Risk warning

Downstream demand in traditional advantage areas such as refrigeration and power and electricity is weak; downstream demand on new tracks such as new energy vehicles and electronics falls short of expectations; and there is a risk of fluctuating raw material prices.