Introduction to this report:

Performance was in line with expectations, and Q2 improved significantly; continued to consolidate 3C advantages and cooperate with major customers to promote new process development; and actively explore new industries and markets based on automation.

Key points of investment:

Maintain additional holdings: Keep EPS unchanged at 1.10/1.46/1.75 yuan for 24-26, and keep the target price unchanged at 27.50 yuan. Maintain an “Overweight” rating.

The performance was in line with expectations, and there was a marked improvement in Q2. In 2024H1, the company achieved revenue of 1.834 billion yuan/ +12.47%, net profit of 0.096 billion yuan/ +6.07%; deducted from non-return mother 0.075 billion yuan/ +11.27%.

The 24Q2 Company achieved revenue of 1.091 billion yuan/ +46.00%, net profit of 0.117 billion yuan/ +206.08%; deducted non-return of 0.123 billion yuan/ +239.34%. The significant increase in 24Q2 revenue was mainly driven by the delivery of key projects. 24H1's gross margin and net margin were 36.26%/5.36%, respectively, which were basically the same as year on year. 24Q2's gross margin and net margin were 38.71%/10.58%, respectively, up 6.05pct/12.87pct from Q1. By the end of June '24, the company's inventory was 3.397 billion yuan, up 39.51% from the end of '23.

Continue to consolidate the 3C advantages and cooperate with major customers to promote the development of new processes. 24H1, the company's 3C revenue was 1.344 billion yuan/ +2.28%, accounting for 73.4% of revenue. In the 3C field, the company continues to expand product categories and downstream application types. At the same time, the company actively cooperates with major customers to promote projects such as FATP and MR equipment. 1) FATP: In '23, the company completed FATP for mobile phone panels and backpanels. 24H1 entered FATP in the middle frame of mobile phones. In the future, FATP will cover more mobile phone production processes and expand to terminals other than mobile phones. 2) MR: The 24H1 company and major customers have demonstrated solutions for next-generation MR production equipment, which is expected to be tested by the end of 24. At the same time, the company also received requests from many XR product customers. In addition to the major customers it currently serves, the company is actively expanding Android mobile phone customers, e-cigarette companies, medical device companies, etc.

Based on automation, we actively explore new industries and markets. 24H1, the company's new energy revenue is 0.437 billion yuan/ +65.39%. In addition, the company actively lays out the semiconductor industry, low-altitude economy, core components and overseas markets. 1) Semiconductors: The company continues to increase investment in R&D. The eutectic machine has received batch orders, and the crystal fixing machine is progressing steadily. 2) Low-altitude economy: The company provides an autonomous drone airport and dispatch and command platform, and 24H1 collaborates with a drone company. 3) Core components: 24H1 achieved revenue of 0.129 billion yuan/ +14.85%, including foreign sales of 36.9969 million yuan. 4) Overseas markets: On the one hand, the company follows 3C's major customers and focuses on developing new energy customers overseas.

Risk warning: 3C recovery falls short of expectations, AI side implementation falls short of expectations, and expansion into new fields falls short of expectations.