Incident: Zhenyu Technology released its 2024 semi-annual report: the company's 24H1 revenue was 3.133 billion yuan, up 30.64% year on year; net profit to mother was 0.132 billion yuan, up 276.35% year on year; net profit after deducting non-return to mother was 0.12 billion yuan, up 425.67% year on year, reaching the upper limit of the performance forecast.
Looking at a single quarter, the company's 24Q2 revenue was 1.69 billion yuan, up 27.20% year on year, up 17.12% month on month; net profit to mother was 0.079 billion yuan, up 312.27% year on year, up 51.10% month on month; net profit without return to mother was 0.082 billion yuan, up 689.26% year on year, up 114.25% month on month.
The company's 24Q2 gross profit margin was 15.77%, up 3.21 pcts month on month, up 1.78 pcts year on year, net margin was 4.69%, up 1.05 pcts month on month, up 3.24 pcts year on year, mainly due to improved profit and cost reduction and efficiency of structural components.
The profit improvement of lithium battery structural components is strong and continuous, and the expansion of new customers is smooth. The company's 24H1 lithium battery precision structural parts revenue was 1.754 billion yuan, up 41.82% year on year, and gross margin was 12.04%, up 1.63 pcts year on year. The company adopted a big customer strategy, concentrated its superior production capacity to serve the Ningde era, and supplied Everweft Lithium Energy, Ruipu, Zhengli, Sunwoda, etc. The company achieved remarkable results in upgrading automation, reducing labor costs, and improving yield. New blade battery products were put into operation, and production lines for short knives and 4680 large cylindrical batteries were developed.
The mold business has high profit margins, contributing to steady profit growth. The company's overseas mold exports increased, and markets such as North America, Europe, Japan and South Korea were completely replaced. 24H1 mold revenue was 0.2 billion yuan, up 36.98% year on year, and gross margin was 55.31%, down 1.02 pcts year on year.
The motor core is equipped with many best-selling models, and the in-mold adhesive technology is leading. The company reduced its dependence on a single major customer, and increased its market share with customers. 24H1 motor core revenue was 0.734 billion yuan, down 0.62% year on year, gross profit margin was 16.02%, down 1.28 pcts year on year, and the net profit level is still growing. The company has stable cooperation with a new energy vehicle company in North America, BYD, Ideal, NIO, Xiaomi, Huichuan Technology, Songe, Borg Warner, United Motors, etc., to provide motor cores for all BYD pure electric and hybrid platforms; motor cores for Xiaomi Su7max, Wanjie M9, Ideal and Extreme Krypton 007, Volvo, etc.
Emphasis is placed on R&D, and precision manufacturing capabilities are entering fields such as humanoid robots. 24H1 invested 0.121 billion yuan in R&D, up 4.77% from last year, accounting for 3.86% of revenue. The company relies on precision processing technology and technology in the field of precision progressive stamping dies and motor cores, and lays out fields such as humanoid robots and electric vertical take-off and landing machines.
Profit forecast, valuation and rating: The price of raw materials for motor cores was reduced, and the annual decline for lithium battery structural parts was higher than expected. The company's net profit forecast for 24-26 was lowered to 0.377/0.539/0.771 billion yuan (12%/11%/9%, respectively). The current stock price corresponding to PE is 13/9/6 times, respectively. The company's profit on lithium battery structural parts continues to improve, and there are differences in expectations for the differentiation and competitiveness of motor core products. They are optimistic about the expansion of the company's precision processing capabilities and maintain a “buy” rating.
Risk warning: the risk of aluminum price fluctuations, downstream demand falling short of expectations, and capacity construction falling short of expectations.