Description of the event

Costa released its 2024 mid-year report. The first half of 2024 achieved revenue of 1.891 billion yuan, a year-on-year decrease of 32.99%, and net profit to mother of 0.219 billion yuan, a year-on-year decrease of 56.24%. After deducting non-return net profit of 0.207 billion yuan, a year-on-year decrease of 57.66%. 2024Q2 achieved revenue of 1.06 billion yuan, a year-on-year decrease of 25.32%, and net profit to mother of 0.095 billion yuan, a year-on-year decrease of 64.4%, after deducting non-net profit of 0.091 billion yuan, a year-on-year decrease of 65.38%.

Incident comments

In terms of revenue, the 2024H1 data center's revenue was 1.232 billion yuan, a slight increase over the previous year; revenue from the new energy business was 0.643 billion yuan, down 59.18% year on year. Affected by European household storage and storage, delivery of major customers was delayed. Despite incremental markets such as Southeast Asia, Africa, and Ukraine, energy storage shipments fell sharply year on year, which had a big impact on performance.

In terms of profit, the gross margin of the 2024H1 data center business is about 35.82%, and the gross margin of the new energy business is about 23.6%. Affected by product price reductions, gross margin declined slightly. The cost rate for the first half of the year was about 15.39%, an increase of 5.47 pct over the previous year, mainly due to increased investment in product development, and rigidity in management and sales expenses. In addition, credit impairment of 0.018 billion yuan was calculated in the first half of the year, mainly due to bad accounts receivable and 0.047 billion yuan of asset impairment, mainly due to inventory price declines. The impairment basically occurred in Q2, which led to a large month-on-month decline in net interest rates. In the end, net interest rates for 24H1 and 24Q2 were 11.37% and 8.58%.

Looking ahead, in terms of the new energy business, with downstream storage, industry restoration and new market development, the company's energy storage shipments are expected to be actively repaired, and the development of the overseas charging pile market is also worth looking forward to; the data center business is relatively steady, and is expected to increase slightly year-on-year in 2024. We expect net profit of around 0.5 billion yuan in 24, corresponding to PE 18 times.

Risk warning

1. The progress of household storage delivery falls short of expectations;

2. Market competition risk.