The company released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 0.862 billion yuan, -8.84% year on year; net profit to mother 0.054 billion yuan, -10.79% year over year; net profit after deducting non-return to mother 0.055 billion yuan, +5.86% year over year. In 2024Q2, the company achieved operating income of 0.418 billion yuan, -16.22% YoY; net profit to mother 0.022 billion yuan, -7.50% YoY; net profit after deducting non-attributable net profit of 0.024 billion yuan, +18.03% YoY.
Sawing business: Steady growth, and there is still room to increase market share. In the first half of 2024, the company's sawing business achieved revenue of 0.336 billion yuan, a year-on-year increase of 4.21%, and gross margin of 44.15%, an increase of 2.55 pcts year-on-year.
In 2023, the company's bimetallic band saw blade sales accounted for about 35% of the domestic market, ranking first in the country and the top three in the world. However, compared to the market share of leading companies such as Europe, America, and Japan, in the context of the gradual transfer of global production capacity to China, the company, as a leader in China, relies on first-mover advantages, channel advantages, product quality and cost performance advantages, and still has a lot of room for improvement in market share. The company integrated and empowered Metson in terms of capacity layout, manufacturing capacity, marketing network, supply chain management, and technology research and development. In the first half of 2024, Metson achieved operating income of 50.9101 million yuan, an increase of 7.51% over the previous year, and achieved net profit of 6.2455 million yuan, an increase of 44.77% over the previous year.
Yada: The manufacturing advantage is obvious, and it is expected that the high-power power supply business will expand. In the first half of 2024, the company's power supply business achieved revenue of 0.526 billion yuan, -15.59% year-on-year, and a gross margin of 0.86%, or -5.40pct year-on-year. Yada was founded in Hong Kong in 1971 and has a brand history of 50+ years. It was once a wholly-owned subsidiary of Emerson (Emerson), a leading global power supply industry leader. Its customers are widely distributed in the fields of consumer electronics, semiconductor equipment, communications, manufacturing, data centers and medical care. Its main customers include Huawei, Apple, HP, and American Advanced Energy.
(1) Consumer electronics power: In the first half of 2024, the company's consumer electronics power business achieved revenue of 0.43 billion yuan, a year-on-year decrease of 8.50%, and the decline continued to narrow. With the rise of AI, major manufacturers are accelerating the promotion of AI phones, which may become an important driving force for the transformation of the mobile phone industry. The company is based on the big customer strategy. As the industry recovers and major customers launch new products and end inventory clean-up, the company's capacity utilization rate and profit situation are expected to improve.
(2) High-power power supply: In the first half of 2024, the company's high-power power supply business achieved revenue of 69.5679 million yuan, a year-on-year decrease of 9.81%. Mainly due to a sharp decline in customer demand for household photovoltaic power supply products. Furthermore, business production lines such as industrial and commercial photovoltaic power supplies, data center power supplies, and site energy power supplies, which were newly expanded in the second half of 2023, are still climbing in production capacity and improving efficiency. Currently, the company's new high-power power supply business on-hand orders are guaranteed. With the gradual improvement of production line efficiency, the orderly release of production capacity, and the successive delivery of in-hand orders, the company's high-power power supply sector's performance situation will continue to improve.
Investment advice: Because the company's high-power power supply business is still in the process of climbing capacity, there is some uncertainty about the rise in production capacity, and demand for household photovoltaics has declined greatly, we expect the company to achieve net profit of 0.137, 0.252, and 0.35 billion yuan in 2024-2026, corresponding to PE of 23, 12, and 9X. The company's sawing business is growing steadily, and Yada has excellent manufacturing capabilities. It is expected to build a leading domestic power platform enterprise and maintain a “buy” rating.
Risk warning: Downstream demand falls short of expectations, high-power power supply production capacity falls short of expectations, consumer electronics power supply business expansion falls short of expectations.