Incidents:

The company published its 2024 mid-year report. 2024H1 achieved operating income of 3.38 billion yuan +76% year over year, and net profit to mother of 0.23 billion yuan +136% year over year.

Comment:

2024Q2 deliveries may be blocked due to shipping issues. The company achieved revenue of 1.56 billion yuan in 2024Q2, +41% year over month, and -14% month on month; realized net profit to mother 0.08 billion yuan, +30% year over year and -50% month on month.

On the one hand, the Red Sea conflict posed a huge challenge to global shipping, and the delivery speed and transportation costs of some of the company's overseas orders were also affected to a certain extent; on the other hand, the company is actively building overseas localized production capacity to weaken the risks brought about by the changing international situation.

Shipments of 2024H1 tracking brackets have increased. The company's 2024H1 bracket business module achieved revenue of 3.27 billion yuan (of which overseas project revenue was 2.72 billion yuan and domestic project revenue 0.55 billion yuan); tracking bracket delivery was about 5.9 GW, and fixed bracket delivery was about 2.1 GW (7.6 GW of tracking brackets delivered in 2023, +203 percent YoY, 9.4 GW of fixed brackets).

2024H1 increased profitability. The comprehensive gross profit margin of 2024H1's stent business was 19.75% (including 20.57% gross profit margin for tracking brackets and 14.15% for fixed brackets), an increase of 3.35 percentage points over the previous year.

There are sufficient orders in hand, and 2024H2 performance may be accelerated. As of 2024H1, the company's on-hand orders were about 6.669 billion yuan, of which the tracking stand was about 5.549 billion yuan, the fixed bracket was about 1.073 billion yuan, and the others were about 0.047 billion yuan, a year-on-year increase (as of 2023H1, the company had orders of about 3.209 billion yuan, of which the tracking stand was about 1.96 billion yuan and the fixed bracket was about 1 billion yuan). The latest data shows that the price of forward contracts for shipping on European routes has declined, and the pressure on 2024H2 shipping may have eased somewhat.

Increase investment in R&D and iteratively update products. 2024H1, the company launched the world's first next-generation product “Tianrou” combining wireless multi-point parallel drive technology with a flexible bracket, and also launched a new generation of photovoltaic intelligent cleaning robots to achieve intelligent and efficient operation throughout the life cycle of photovoltaic power plants; the R&D cost was 0.076 billion yuan +15% compared to the same period last year, and the R&D cost rate was 2.3%.

Maintain a “buy” rating. The company's tracking bracket sales are expected to reach 12GW+ in 2024, up 50% + year on year; net profit from 2024 to 2026 is estimated to be 0.7/0.94/1.21 billion yuan, +103%/34%/29% year-on-year, corresponding PE 17/13/10 times.

Risk warning: Market competition intensifies, international trade risks, company performance falls short of expectations