Incidents:

Ada Intelligence released its 2024 mid-year report on August 29, 2024. In the first half of 2024, the company achieved revenue of 0.313 billion yuan, +40.93% year-on-year; net profit to mother of 12.7359 million yuan, or -141.26% year-on-year.

Investment highlights:

Continue to promote the expansion of new businesses and new customers, and increase revenue over the same period last year; maintain high investment in R&D and sales, and suppress profits in stages. In the first half of 2024, cooperation between the company and existing major customers was stable. International and domestic brand customers continued to expand and gradually deepen cooperation, while continuing to enrich product types, broaden product lines, and achieve an increase in business scale through continuous input of outstanding talents and team building. However, the company continued to invest heavily in R&D, vigorous expansion of product categories, increased domestic and foreign market development efforts, and introduction of R&D and sales personnel, etc., causing the company's profit ratio to rise in stages. In the first half of 2024, the company achieved revenue of 0.313 billion yuan, +40.93% year-on-year; realized net profit to mother of 12.7359 million yuan, -141.26% year-on-year.

Consumer electronics entered the FATP process for major customers, and customers in the fields of automotive electronics, new energy, and semiconductors were developing smoothly. In the first half of 2024, while continuing to stabilize its application advantages in the consumer electronics field, the company continued to expand its business in the fields of automotive electronics, new energy (especially hydrogen energy), and semiconductors. Consumer electronics sector: The company deeply binds major customers through high-quality products and services. In addition to continuing to deepen the SMT electronic assembly process, which has formed a competitive advantage, it is also actively expanding other process section equipment for major international customers, including FATP intelligent production equipment, to provide customers with more process section solutions. Automotive electronics sector: In 2023, the company successfully entered the supply chain of leading international automotive electronics customers and leading domestic customers such as Tesla, BYD, JP, and India's TATA. In the first half of 2024, the company received orders from a number of major automobile manufacturers and EMS manufacturers, and achieved good development.

Hydrogen energy sector: The company's hydrogen energy fuel cell production equipment has been widely recognized by customers, supporting more customers in the hydrogen energy industry. Good expansion has been achieved in the first half of the year, and more fuel cell production equipment is expected to be shipped to customers in the second half of the year.

Adhering to R&D innovation and promoting technological iteration, new products such as the ADA intelligent platform and high-end five-axis machine tools have been recognized by customers one after another. In the first half of 2024, in addition to continuing to deepen the research and development of various precision control valves, the company also focused on developing technologies such as optical inspection, rubber inspection, screw batch and control software, servo motors and drivers, plasma, etc., to promote product upgrades and iterations, strengthen competitive strength, continue to broaden the product line while iteratively upgrading traditional products such as fluid control application products, and strategically develop industrial-grade femtosecond lasers, small and medium-sized five-axis intelligent module CNC machine tools, intelligent industrial collaborative robots, and visual inspection. In the first half of the year, the company increased the marketing of new products such as the ADA intelligent platform, high-end five-axis machine tools, and glue-pouring machines. By exploring the needs of new and old customers, the company provided customers with more comprehensive product solutions. At present, the company's ADA intelligent platform has been recognized by more and more customers and has continued to be shipped to major customers; the company's high-end five-axis machine tools continue to be tested on clients, and have developed some customers, with good results.

Profit forecast and investment rating: As a leading domestic fluid control equipment company, the company continues to strengthen its talent layout, technical layout, product layout and market layout. As of the first half of 2024, the company's strategic layout has achieved initial results. In the future, as market demand in the consumer electronics industry continues to pick up and the opportunities for industry transformation brought about by AI technology, the company's applications in the consumer electronics industry will continue to benefit; as the company deepens its layout in new industries such as automotive electronics, new energy (especially hydrogen energy), and semiconductors, and new products are recognized by the market, it will further open up development space and enhance profitability. Considering the company's expense investment pace and market development situation, we adjusted the company's profit forecast. We expect the company's revenue for 2024-2026 to be 0.651, 0.851, and 1.106 billion yuan, respectively, achieving net profit to mother of 0.088, 0.125, and 0.189 billion yuan. The corresponding PE is 25X/18X/12X, respectively. We are optimistic about the company's long-term development and short-term performance elasticity, and maintain a “buy” rating.

Risk warning: Consumer electronics customer demand falls short of expectations, development of new customers falls short of expectations, ADA product advancement falls short of expectations, risk of iterative technology updates, and risk of exchange rate fluctuations.