Incident: The company released its 2024 semi-annual report. 24H1 achieved revenue of 0.639 billion yuan, +39.1% year over year; net profit to mother of 0.098 billion yuan, +60.3% year over year, in line with the previously released performance forecast center; gross profit margin of 25.1%, +0.1pp year on year, net profit margin 15.4% year on year, +2pp year on year. Among them, 24Q2 achieved revenue of 0.34 billion yuan, +33.7% YoY, +13.8% month-on-month; net profit to mother 0.054 billion yuan, +39.4% YoY and +22.6% month-on-month.

Various products grew at the same time, and the cost rate continued to decline: 24H1 achieved rapid growth in all products, including cooling system hose revenue of 0.357 billion, +28.6% year on year, fuel system hose revenue 0.187 billion, +73.3% year on year, accessory system and brake hose revenue 0.035 billion, +15.2% year on year, motorcycle hose revenue 0.035 billion, +7.4% year on year, other business 0.025 billion, +128% year on year. 24Q2 gross profit margin 24.9%, YoY -1.5pp, month-on-month -0.5pp, net profit margin 15.9%, YoY +0.6pp, month-on-month +1.1pp, expense ratio 8%, YoY -1.2pp, month-on-month -0.9pp, cost control is effective.

The share of new energy continues to increase, and cooperative customers continue to develop: in '23, the company's NEV customers accounted for 31.6%, +4.8pp compared to the same period last year. Currently, the company has a customer base of more than 50 automobile OEMs, more than 50 motorcycle manufacturers, and hundreds of secondary suppliers. In terms of new energy, the company and BYD (Dynasty series, Ocean series, etc.), GAC Aian (AION series, etc.), Wuling (MiniEV, etc.), BAIC New Energy (Jihu, etc.), Changan New Energy (Deep Blue, Avita, etc.), Jinkang Celis (Genjie M series, etc.), Geely New Energy (Linker, Jikrypton, etc.), Dongfeng New Energy (Lantern, etc.) etc.), and automobile manufacturers such as Ideal Intelligent Manufacturing have established long-term and stable cooperative relationships, The share of new energy sources is expected to continue to rise.

Production capacity continues to expand, and there is great potential for growth in new fields: the company's “incremental (manufacturing) expansion of traditional automobile and new energy vehicle parts” project was designed to add 10,000 tons of hose production capacity, with a design capacity of 2 billion yuan. It is expected that it will all be completed and put into production and use in 24 years. The company is actively expanding liquid cooling pipelines used in energy storage, electricity, data centers, etc., and pipeline systems in rail transit, oil and gas exploration, ships and other markets, enriching product categories, expanding product applications, and continuously cultivating new future revenue growth points; it first entered the aircraft field, and a pipeline system developed with China Airlines Xifei Civil Aircraft has been applied to the commercial unmanned transport aircraft field of Xifei Civil Aircraft. Currently, the commercial unmanned transport aircraft has successfully completed its first flight test. The future will proceed according to this customer's process.

Profit forecasting and investment advice. The company's 2024-2026 EPS is expected to be 1.03/1.24/1.42 yuan respectively, corresponding PE is 14/12/10 times, and net profit CAGR to mother is 23.8%, maintaining a “buy” rating.

Risk warning: competition increases risk; risk of customer development falling short of expectations; risk of rising raw material prices, etc.