The company released its 24-year report, and its performance exceeded expectations. The company's revenue for the first half of the year was 9.65 billion yuan, up 37% year on year; net profit to mother was 0.87 billion yuan, up 6% year on year; net profit after deducting non-return to mother was 0.77 billion yuan, up 41% year on year. Revenue for the second quarter was 5.27 billion yuan, up 42% year on year; net profit to mother was 0.56 billion yuan, up 9% year on year; net profit after deducting non-return to mother was 0.45 billion yuan, up 50% year on year. The performance after deducting non-net profit exceeded expectations, mainly due to the company's strong revenue growth combined with an increase in gross margin exceeding expectations. The growth rate of net profit after deducting non-net profit was higher, mainly due to the fair value change earnings of participating companies contributing 0.2 billion in net profit in mid-'23 (only 73.8 million in the current period) and government subsidies of 63.84 million yuan in mid-'23 (only 25 million in the current period). The company plans to pay an interim dividend of 0.6 yuan/share (tax included), with a dividend rate of 37%.

All three businesses are growing rapidly, and the continuous launch of innovative products is driving high growth. 1) Revenue from charging and energy storage products increased 43% to 4.98 billion yuan. Categories accounted for 52% of total revenue, and gross margin decreased by 0.4 pct to 43.0% year over year. The company actively launched the AnkerMaggo ultra-fast magnetic wireless charging series, and Anker Zolo comes with a dual-wire travel power bank, bringing users a lighter, easier to carry, safer and faster charging experience. 2) Revenue from smart innovative products increased 35% to 2.36 billion yuan. The category accounted for 24% of revenue, and gross margin increased by 3.3 pct to 48.3% year-on-year. In the field of intelligent cleaning, the company launched the eufy X10Pro Omni in February, focusing on deep cleaning, integrating sweeper and all-purpose base station; in March, the eufy S1 Pro all-purpose floor washing robot was launched, which accurately senses the environment and navigation, and has an efficient self-cleaning system and intelligent high-frequency washing and mopping performance. In the field of smart home security, the eufy 4G LTE Cam S330 was launched in the first half of the year. Using innovative solar and 4G LTE dual connection technology, combined with 4K ultra-high-definition resolution and 360-degree panoramic AI tracking, it provides users with an outdoor security solution that can achieve high-definition monitoring without a subscription service. 3) Revenue from smart video products increased 31% to 2.31 billion yuan. Categories accounted for 24% of total revenue, and gross margin increased 4.9pct to 46.6% year over year. New products such as the Soundcore C30i ear-clip headphones, the Soundcore Boom 2 and its plus outdoor portable Bluetooth speaker are being launched one after another.

By channel, online growth is faster than offline, and the growth rate of independent sites is impressive. 1) Online revenue accounts for 70%, and channels are diversified. Online revenue increased 38% to 6.7 billion yuan, and revenue share increased by 1pct to 70%. Among them, Amazon's revenue increased by 28% to 5 billion yuan, and its revenue share decreased by 3.6 pct to 52%. As the company continues to strengthen the construction of independent stations and increase in the share of complex products, the revenue of independent stations was 0.92 billion yuan, an increase of 103% over the previous year, and the revenue share increased by 3.1 pct to 10%. 2) Steady development of offline channels. Offline revenue increased 32% to 2.9 billion yuan, and revenue share decreased by 1pct to 30%.

At present, the company has entered well-known supermarket chains such as Walmart, Best Buy, and Target in North America, as well as 7-11 convenience stores in Japan, and continues to expand its offline channels in Europe, Australia, Southeast Asia, etc.

Looking at the sub-regional markets, the core markets have all achieved rapid growth. North American revenue increased 41% to 4.6 billion yuan, accounting for an increase of 1 pct to 48%. European market revenue increased 45% to 2.1 billion yuan, accounting for an increase of 1pct to 21%. Japan's revenue increased 22% to 1.3 billion yuan, accounting for a decline of 2pct to 13%. Revenue in the Middle East and mainland China both increased 39% to 0.57/0.38 billion yuan, accounting for 6%/4%. Australian revenue increased 23% to 0.35 billion yuan, accounting for 4% of revenue. The company actively explores platform features and user preferences in potential markets such as Australia and mainland China, optimizes the business model in a targeted manner, and achieves better business results.

Profitability improved, and operational efficiency continued to improve. The gross margin increased by 2 pct to 45.2% year on year in the first half of the year, and the sales expense ratio increased by 0.6 pct to 22% year on year, mainly due to the increase in sales promotion expenses, sales platform expenses, and sales staff remuneration as the business grew. The management expense ratio increased by 1.1 pct to 4.1% year-on-year, mainly due to the increase in managers' wages, remuneration and share payment expenses. The R&D cost rate decreased by 0.2 pct to 8.3% year over year. The deducted non-net interest rate increased by 0.2pct to 7.9%.

As the peak season begins, inventory reserves have increased, and cash flow has improved dramatically. Inventory increased 35% year over year to 3.07 billion yuan, mainly due to increased business volume and increased demand for stocking. Net operating cash flow increased 38% year over year to 0.84 billion yuan, reflecting an increase in operating efficiency.

Anke Innovation is a well-known global consumer electronics brand. With product strength as the core, technical barriers and product advantages continue to be strengthened, driving rapid growth in performance and maintaining a “buy” rating. The company attaches importance to investment in R&D, continues to refine and launch new products that meet user needs. The advantages of core charging products continue to be consolidated, and new product expansion effects such as intelligent innovation are gradually showing. It is expected that the excellent brand image and operating experience will continue to expand into multi-channel and multi-regional markets in the future. Considering that the company's performance exceeded expectations, the 24-26 profit forecast was raised. Net profit for 24-26 is estimated to be 1.98/2.4/2.83 billion yuan (originally 1.91/2.23/2.6 billion yuan), which corresponds to PE of 17/14/12 times, maintaining a “buy” rating.

Risk warning: risk of changes in online platform rules; increased risk of industry competition; risk of new product promotion falling short of expectations.