1H24's engineering inspection business repair, 2Q24's net profit to mother +2.7% YoY 1H24, the company achieved operating income/net profit to mother 1.041 billion yuan/26.34 million yuan, +3.6%/-6.3% YoY; 2Q24, the company's revenue/net profit to mother ratio +8.7%/+2.7% to 0.583 billion yuan/53.68 million yuan. 1H24's engineering inspection business was repaired, with revenue +9.6% to 0.393 billion yuan, and gross margin +0.6pp to 40.08% year-on-year. We expect the company's net profit to be 0.271/0.308/0.346 billion yuan in 2024-2026, corresponding EPS of 0.34/0.38/0.43 yuan. Considering that the company is leading the ROE industry and the results of the engineering inspection transformation are beginning to show, the company was given 25.5xPE in 24 years (comparable to the average expected PE value of 18.4x for the company Wind), with a target price of 8.62 yuan (previous value: 9.85 yuan) to maintain a “buy” rating.
1H24 inspection instruments and intelligent manufacturing revenue were +9.9% year-on-year, and inspection revenue was +2.6% 1H24. By sector, the company's inspection/certification/inspection instruments and intelligent manufacturing/measurement calibration/scientific research and technical services achieved operating income of 7.49/0.48/0.134/0.02/0.087 billion yuan, respectively, +2.6%/-0.3%/+20.5%/+2.0%. The company continues to expand its intelligent manufacturing business. Based on traditional advantages such as steel and cement, the company has achieved continuous breakthroughs in the non-ferrous industry. 1H24 achieved a contract amount of about 0.22 billion yuan, an increase of about 20% over the previous year. In 1H24, the company and its subsidiaries issued a total of 0.6495 million inspection reports. The company's inspection and testing business revenue accounted for 72% of the company's total revenue. Of these, engineering/materials/environmental/food and agricultural testing achieved revenue of 3.93/0.174/0.14/0.041 billion yuan respectively, +9.6%/-1.6%/-11.4%.
1H24's overall gross margin was -1.82pp, material testing gross margin was +4.06pp1H24 year-on-year, and the company's overall gross margin was -1.82pp to 37.83% yoy. By sector, 1H24's gross profit for inspection and testing/certification/inspection instruments and intelligent manufacturing/measurement calibration/scientific research and technical services was 2.91/0.18/0.036/0.008/0.039 billion yuan, +0.6%/-4.8%/-16.2% -4.8% compared with the same period last year.
In 1H24, the gross margin of engineering/materials/environment/food and agriculture testing was +0.6/+4.06/-9.29/ -4.71 pp to 40.08%/53.82%/19.53%/29.48%, respectively, and the overall gross margin of the inspection and testing sector was -0.78pp to 38.84% year over year. The company's engineering inspection transformed into infrastructure and existing construction fields, traditional building materials inspection to high-end inspection products and technical consulting and services, and the results of 1H24 engineering inspection transformation began to show.
Risk warning: The recovery of the real estate industry fell short of expectations, acquisition progress and integration capacity fell short of expectations, and the decline in expenses fell short of expectations.