24H1 performance: Achieved revenue of 1.492 billion yuan, +12.02% YoY, net profit attributable to mother 0.301 billion yuan, -2.00% YoY, net profit not attributable to mother 0.289 billion yuan, or -2.28% YoY.

24Q2 performance: Achieved revenue of 0.801 billion yuan, +7.85% year over year, net profit to mother of 0.16 billion yuan, -13.52% year over year, net profit of 0.157 billion yuan after deducting non-attributable net profit of 0.157 billion yuan, or -12.16% year over year.

Domestic demand weakened marginally in the first half of the year, and revenue growth was lower than expected at the beginning of the year. Woodworking machinery is a post-real estate cycle. At this stage, real estate has been deeply adjusted, and domestic demand has weakened marginally. Therefore, the Q2 revenue growth rate in a single quarter was lower than the overall revenue growth rate in the first half of the year.

Revenue structure: Domestic sales revenue in the first half of the year was 1.091 billion yuan, +12.62% YoY, accounting for 73.13%; export sales were 0.401 billion yuan, +10.41% YoY, accounting for 26.87%. Among overseas markets, the Eastern European market is large and growing steadily, while the South American and Middle Eastern markets are growing rapidly and have potential for growth. Edge banding machine revenue +3.45% YoY, accounting for 39.79%; Multi-row drill revenue +39.37% YoY, accounting for 22.95%; Processing center revenue -10.35% YoY, accounting for 12.32%; Panel saw revenue +31.26% YoY, accounting for 11.21%.

The main reason for the decline in gross margin was that the company adopted an active strategy in the first half of the year to seize market share. The company's gross margin for the first half of the year was 31.74%, -1.28pcts; Q2's gross profit margin for the single quarter was 32.51%, -1.23pcts yoy, +1.67pcts month-on-month.

New production capacity was introduced, and net profit was under pressure due to the increase in cost ratios during the period. The company's net interest rate for the first half of the year was 20.43%, -2.76pcts year-on-year, 20.18% in Q2, -4.79pcts year-on-year, and -0.54 pcts month-on-month. Since the company's Shunde CNC equipment base was put into trial operation at the beginning of the year, production capacity is still climbing. Depreciation expenses increased a lot in the first half of the year. Depreciation expenses increased a lot in the first half of the year. 24H1 depreciation was 35.266 million yuan, and 23H1 depreciation was 29.366 million yuan. In the first half of the year, the company's sales/management/ financial/ R&D expense ratios were 1.53%/3.98%/-0.49%/3.89%, respectively. The total cost rate for the period was 8.91%, +1.28 percentage points year-on-year, mainly due to the increase in related management expenses after the new factory was put into operation, the increase in exhibition and promotion expenses, and the company increased R&D investment.

Maintain a “Highly Recommended” investment rating. The downturn in real estate affects demand. We lowered our profit forecast. The company's revenue for 24-26 is 2.9/3.3/3.8 billion, up 8%/14%/16% year on year; net profit to mother is 0.63/0.72/0.81 billion, up 6%/15%/13% year on year, corresponding PE is 10/9/8 times. After the in-depth adjustment of real estate is completed, the source of demand for furniture is expected to gradually change from project orders to demand for decoration and procurement of furniture such as affordable housing and shantytown renovation. The company is expected to continue to expand the domestic home improvement market and overseas incremental market to increase its market share. Maintain a highly recommended rating.

Risk warning: demand falls short of expectations, increased industry competition, risk of overcapacity