Event: Bull Group announces 2024 semi-annual announcement. In 2024H1, the company achieved revenue of 8.39 billion yuan, YoY +10.5%; realized net profit to mother of 2.24 billion yuan, YoY +22.9%.

After conversion, Q2 achieved revenue of 4.58 billion yuan in a single quarter, YoY +7.6%; realized net profit of 1.31 billion yuan to mother, and YoY +20.6%. The company's traditional advantage business is growing well, and its emerging business continues to grow rapidly.

Q2 Revenue growth is steady: Looking at Q2's business segments, 1) In terms of electrical connectivity, the company launched Z generation converter products for young users, scenario-based functional rail sockets for home users, and special chargers for battery car charging scenarios. According to the company's announcement, the revenue of the electric connection business increased 5% in the first half of the year. We analyzed the steady growth of Q2's electric connectivity business; 2) In terms of smart electrical lighting, the company promoted the rapid development of the headlamp business by operating under the Bull and Muguang brands; launched trendy decorative lights covering various categories such as staircase lights, chandeliers, floor lamps, etc.; and launched a new strategic floor-standing eye protection lamp. According to the announcement, H1 smart electrician lighting revenue increased 12%. We judge that the Q2 smart electric lighting business has achieved relatively rapid growth; 3) The company's new energy business launched a stepless series of household charging piles in the field of home charging, and continues to enrich the fast charging DC pile product line represented by group charging in the fast charging field. According to the announcement, H1's new energy business revenue increased 120%. We judged the rapid growth of the new energy business in Q2.

Q2 profitability continued to increase year over year: Q2 company gross margin +0.4 pct year on year, net profit margin +3.1 pct year on year. Q2 The increase in the company's gross margin is mainly due to the company's continuous promotion of lean, automated, and digital supply chain construction, and achieved results in cost control.

Q2 The increase in the company's net interest rate was greater than the increase in gross margin mainly due to the increase in net investment income of +0.19 billion yuan year-on-year.

Q2 net cash flow from operating activities decreased year on year: the company's Q2 net cash flow from operating activities was -0.7 billion yuan year on year. The main reasons include: 1) Increased company expenses. Q2 The company paid other cash related to operating activities +0.4 billion yuan year over year. 2) The company's advance payments decreased year over year. Q2 Cash received by the company from sales of goods and provision of labor services -0.22 billion yuan year-on-year.

Investment advice: Bull is a leader in the domestic civil electrical industry. It continues to promote the upgrading of advantageous products such as converters and wall openers to consolidate its leading position. In recent years, Bulls have actively laid out two new tracks without headlights and new energy charging, which is expected to build a new growth curve. We expect the bulls' EPS to be 3.57/3.91/4.24 yuan respectively from 2024 to 2026, with a 6-month target price of 85.78 yuan, corresponding to the 2024 PE valuation of 24X, maintaining a buy-A investment rating.

Risk warning: The price of raw materials has risen sharply, and the development of new business falls short of expectations.