Matters:

The company released its 2024 mid-year report. 24H1 achieved revenue of 9.65 billion yuan, +36.5% year-on-year, net profit to mother of 0.87 billion yuan, +6.4% year-on-year, after deducting non-attributable net profit of 0.77 billion yuan, or +40.5% year-on-year. 24Q2 revenue of 5.27 billion yuan, 42.4% YoY, net profit 0.56 billion yuan, YoY +9.2%, net non-attributable net profit of 0.45 billion yuan, +50.0% YoY

Commentary:

Revenue accelerated marginally, and major categories continued to grow at a high rate. 24H1 achieved revenue of 9.65 billion yuan, +36.5% year over year, of which single Q2 revenue was 5.27 billion yuan, +42.4% year over year, and revenue performance is still accelerating. By business, 24H1 charging and energy storage revenue of 4.97 billion yuan, or +42.8% over the same period, is still the main driver of the company's growth. On the one hand, it has benefited from the company's continuous iteration of product types and increased growth in emerging markets; on the other hand, portable energy storage continues to increase rapidly (according to Jiuqian data, 24H1 America and Asia have more than doubled year-on-year growth). At the same time, products in the household energy storage sector are also on the market. It is expected to drive further growth in the energy storage business in the future. Revenue from the Smart Innovation category was 2.36 billion, +35.3% over the same period. Judging that the security category contributed the main increase, and the launch of new high-end sweepers such as the EuFyX10 Pro Omni is expected to drive the revenue growth rate back. Revenue from the smart video category was 2.31 billion yuan, +30.8% year over year, mainly due to the centralized launch of various new products in the first half of the year and the acceleration of regional expansion in Southeast Asia and other regions.

After deducting non-performance, it further exceeded expectations, and profitability increased steadily due to increased investment. 24H1's performance was 0.87 billion yuan, +6.4% year over year, minus 0.77 billion yuan, and +40.5% year over year, including single Q2 performance of 0.56 billion yuan, +9.2% year over year, after deducting 0.45 billion yuan of non-performance, +50.0% year over year. Non-recurring profit and loss were mainly disrupted by fair value and other items, but the profit growth rate of the main business was impressive. We determined that in addition to factors such as supply chain optimization and product structure upgrades, the development and integration of offline channels also contributed to the company's profit improvement (24H1 offline gross margin +3.2% YoY), bringing the 24Q2 company's gross margin +0.6pcts to 45.2% year over year. In terms of expense ratios, 24Q2's sales/management/R&D/finance expenses ratio was 21.6%/4.0%/8.1%/-0.3%, and the year-on-year expense ratio was basically the same. Among them, the financial expense ratio optimization was mainly related to the increase in exchange income due to exchange rate fluctuations. Under the combined influence, the 24Q2 company's net interest rate after deduction of non-return mother was +0.4 pct to 8.5% year on year, and profitability continued to increase.

The idea of high-quality growth is clear, and the company's operations are gradually improving. The company's strategic planning path this year is clear. The first is to strengthen the development of new markets such as Australia and Southeast Asia. Strengthening the layout of weak countries will not only bring growth to traditional categories such as charging and headsets, but is also expected to open up room for future growth. Second, expanding and deepening offline channels in Europe and other regions. Reaching a wider range of consumer groups is expected to amplify the revenue contribution of the European market. At the same time, refined management of offline channels will also have a positive effect on improving profits. Third, core categories such as energy storage and security are still growing rapidly, and business shortcomings such as sweepers are also being actively filled. Combined with the launch of Anker Solix household storage products, it is expected to open up a new growth curve. We believe that the company's current inertial growth may be sufficient to support a compound revenue growth rate of 20% or more in the next 2-3 years, and that the statements continue to be high-quality to achieve a deterministic premium of more value.

Investment suggestions: The company continues to implement increases in various categories, regions, etc., and operations are clearly improving, and subsequent growth is worth looking forward to. We adjusted the 24/25/26 EPS forecast to 3.82/4.75/5.80 yuan (previous value 3.82/4.67/5.59 yuan), and the corresponding PE was 16/13/10 times. Referring to the DCF valuation method, we raised our target price to 90 yuan, corresponding to 24 times PE in 24 years, maintaining a “strong push” rating.

Risk warning: macroeconomic fluctuations, industry competition intensified, category adjustments fell short of expectations.