Ningbo Jingda released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 0.396 billion yuan, an increase of 10.86% year on year; net profit to mother was 87.6378 million yuan, down 4.86% year on year. In a single quarter of Q2, the company achieved revenue of 0.213 billion yuan, +5.93% year-on-year; net profit to mother was 34.3146 million yuan, or -36.80% year-on-year.

The company's Q2 performance declined year-on-year, mainly due to changes in financial expenses and sales expenses. Net profit due to Q2 decreased by 19.9779 million yuan compared to the same period last year. Among them, financial expenses increased by 14.2052 million yuan over the same period last year, mainly due to a decrease in exchange gains and losses. In addition, sales expenses for Q2 were 20.9523 million yuan, an increase of 6.2293 million yuan over the same period last year, mainly due to an increase in employee remuneration, etc.

The share of overseas revenue continues to rise. Since last year, the company's exports have maintained a high level of prosperity, and the share of overseas revenue has continued to rise. In 2023H1/2024H1, the company's overseas revenue accounted for 37.3%/42.2% of the company's total revenue, respectively. The share of overseas revenue increased by 4.9 pcts year-on-year in the first half of this year. The gross margin of the export business is much higher than that of domestic sales. The gross margin for 24H1 export sales was 61.04%, and the gross margin for domestic sales was 37.76%.

By business, the company's presses/ heat exchanger equipment/ microchannel equipment achieved revenue of 0.202/0.089/0.097 billion yuan, +23.1%/-34.7%/+97.2% year-on-year; achieved gross profit margin of 48.02%/44.25%/46.54%, +8.1/-9.2/+0.9pct. The company's microchannel equipment entered the supply chain of many international auto parts giants such as MAHLE, Magna, and Denso, and the absolute value of revenue surpassed the heat exchanger equipment business for the first time. The year-on-year decline in heat exchanger equipment is mainly due to the long inspection cycle for heat exchanger equipment, which is not a sign of a decline in downstream demand. In terms of presses, performance grew steadily due to the return of overseas manufacturing and the continuous increase in the penetration rate of new energy sources. Furthermore, the increase in the share of overseas revenue has led to a significant increase in the gross margin of presses.

In the first half of the year, the company's press research and development progressed rapidly. 1. The stretching of 46 large cylindrical battery cases has progressed, and the equipment has been contracted for multiple production lines and delivered to customers. 2. Research and development of ultra-precision high-speed presses with lower dead point accuracy compensation has progressed, and it is expected to enter ultra-precision stamping fields such as precision lead frames and battery explosion-proof sheets to achieve import substitution. 3. The four-station spinning machine with aluminum alloy wheels has been delivered, which is expected to increase the press business.

Investment advice: Ningbo Jingda's performance has been growing steadily over the years, and gross margin has been rising steadily. The decline in performance growth in the second quarter did not affect long-term profitability. We maintain our previous earnings forecast. It is estimated that in 24/25/26, the company will achieve operating income of 0.823, 0.994, and 1.174 billion yuan, and net profit of 0.187, 0.223, and 0.261 billion yuan, respectively, corresponding to PE14.1/11.8/10.1 times PE. Maintain a “Highly Recommended” rating!

Risk warning: Deterioration of the international trade environment, deterioration of the macroeconomic environment, etc.