Incident: The company released its 2024 semi-annual report. 2024H1 achieved operating income of 0.154 billion yuan, a year-on-year increase of 0.21%, and achieved net profit to mother of 0.141 billion yuan, increasing the loss margin; 2024Q2 achieved operating income of 0.141 billion yuan, an increase of 33.81% year-on-year, achieving net profit to mother of -0.05 billion yuan, and the loss margin increased.

The drop in product prices led to a sharp drop in gross margin, and the cash flow situation improved.

According to statistics from the Orange Association Research Institute, 2024H1 achieved sales of 666 fuel cell systems, an increase of 303.64% year on year, and achieved fuel cell system power sales of 61461.1 kW, an increase of 216.23% year on year; however, due to the sharp drop in product prices, the gross margin of the 2024H1 company decreased by 18.93 pcts year on year to 17.71% year on year. As product delivery gradually picked up, the company's gross margin improved significantly to 25.40% month-on-month in 2024Q1, but compared to 2023Q2 2024Q2 There was also a significant decline of 37.44%.

The net cash flow from 2024H1's operating activities was -0.183 billion yuan, a significant improvement over the same period last year (2023H1 was -0.276 billion yuan). The main reason was the year-on-year improvement in sales repayments and the amount of government subsidies received; as of the end of 2024H1, the company's cash and cash equivalent balance was 0.585 billion yuan.

Policies related to high-speed hydrogen energy have been introduced one after another, and fuel cell demand is expected to increase on a large scale.

According to hydrogen cloud chain data, since March 2024, five provinces, including Shandong, Sichuan, Inner Mongolia, Jilin, and Shaanxi, have successively announced free high-speed toll policies for hydrogen vehicles. The implementation of this policy is expected to directly reduce the operating costs of hydrogen energy trucks.

According to the calculation results of Jet Hydrogen Technology, the full life cycle operating cost (TCO) of a 49-ton hydrogen heavy truck is about 3.844 million yuan, of which the bridge crossing fee is 0.36 million yuan, accounting for about 9.37%. According to the “Shandong Toll Road Truck Fee Disclosure Form”, the toll standard for Class 6 trucks on the Jinan-Qingdao Expressway is 2.75 yuan/km (95 discount on cargo 6), the 49-ton hydrogen energy heavy truck has an annual operating period of 300 days, a daily mileage of 150 kilometers, and a 5-year life cycle, bicycles can save about 0.59 million yuan in highway fees. With the support of the subsidy policy, hydrogen energy heavy trucks are expected to operate economically, which in turn will drive industry demand to bring large-scale volume.

Maintaining an “Overweight” rating: We maintain our profit forecast. We expect the company to achieve net profit of -0.149/-0.115/-0.017 billion yuan in 24-26. Taking into account the high growth of the industry, the company's strong supporting capacity and market expansion capabilities, self-produced electric reactors and scale, there is plenty of room for improvement in profitability. As the first A+H fuel cell stock, the company is expected to benefit from the high growth of the industry, be optimistic about the company's growth trend, and maintain a “gain” rating.

Risk warning: Increased competition, orders falling short of expectations, high customer concentration, and accounts receivable payments falling short of expectations.